Olam International (VC2) H2 2024 earnings summary

Executive summary

• Achieved nearly 50 million tons in sales volume and surpassed S$56.2 billion in revenue, with EBIT up 9.2% to S$1.94 billion, driven by strong performances from ofi (+29.1% YoY) and Olam Agri (+5.8% YoY), despite challenging macroeconomic conditions.

• PATMI declined 69.0% to S$86.4 million due to significantly higher net finance costs and exceptional losses, while operational PATMI was S$216.3 million.

• Free cash flow to equity was negative S$5.9 billion, and net gearing rose to 2.79x, but adjusted net gearing remained stable at 0.68x.

• Board recommended a total dividend of 6.0 cents per share for 2024, down from 7.0 cents in 2023.

• Major re-organisation included the sale of 44.58% in Olam Agri to SALIC for US$1.78 billion, with plans to sell the remaining 19.99% stake in three years.

Financial highlights

• Revenue increased 16.3% year-over-year to S$56.2 billion, mainly driven by ofi; EBITDA grew 8.0% to S$2.7 billion.

• EBIT for ofi grew 29.1% to S$1.07 billion, led by strong performance in Ingredients & Solutions; Olam Agri EBIT rose 5.8% to S$1.02 billion.

• Free cash flow to equity was negative S$5.9 billion, impacted by higher working capital and interest payments.

• Gearing increased from 1.73x to 2.79x, mainly due to higher working capital from commodity price surges, but adjusted net gearing remained stable at 0.68x.

• Liquidity remains robust with S$23.1 billion available, including S$3.3 billion cash and S$7 billion in unutilized bank lines.

Outlook and guidance

• Expects continued volatility and uncertainty in 2025 from geopolitical tensions, trade policy shifts, inflation, and regional conflicts.

• ofi maintains guidance for low- to mid-single digit volume growth and high single-digit adjusted EBIT growth over the medium term, focusing on value-added ingredients and solutions.

• Olam Agri anticipates continued profitable growth across all segments, supported by SALIC as a strategic shareholder.

• Remaining Olam Group aims to reduce losses, divest non-core assets, and explore strategic options, including a potential IPO for ofi.