Olam Group has posted 1HFY2024 ended June patmi of $48.1 million, up by a slight 0.4% y-o-y as operational profit growth was offset by a significant increase in net finance costs of $217.4 million as well as higher taxes.
This includes exceptional losses of $25.4 million on the closure of the funds management business and ongoing re-organisation expenses. Excluding these exceptional losses, operational patmi was down by 60.1% to $73.5 million.
Olam’s operational profit or ebit increased 8.3% y-o-y to $888 million on strong earnings growth from OFI. Excluding amortisation of acquired intangibles, ofi’s adjusted ebit was $497.8 million in 1HFY2024, up 66.1% y-o-y. Olam Agri reported ebit of $512 million, 8.4% lower y-o-y. The remaining Olam Group VC2 incurred increased losses of $99.5 million from a prior loss of $16.7 million.
Revenue was up 9.1% y-o-y to $26.9 billion as the fall in commodity prices across several products in the Olam Agri portfolio was offset by higher selling prices for some products within the OFI portfolio.
Olam’s Free Cash Flow to Equity (FCFE) ended at negative $5.4 billion in 1HFY2024 on significantly higher working capital deployed amid unprecedented price increases for certain commodities and higher interest costs over the period.
As at June 30, net gearing stood at 2.60 times, compared to 1.74 times a year ago, on funding the sharply higher working capital requirements, particularly in cocoa and coffee. Adjusted net gearing was 1.04 times.
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During the period, Olam bought back 25.1 million shares, equivalent to $28.5 million. The mandate has been renewed in April to continue the buyback programme of up to a maximum of 5% of outstanding shares.
Olam has declared an interim dividend of 3 cents per share for the period.
“We remain committed to executing our re-organisation plan to unlock value. We continue to evaluate all internal and external factors that would underpin the success of the proposed IPOs of OFI and Olam Agri, while exploring all other strategic options,” says Sunny Verghese, Olam cofounder and CEO.
Shares in Olam closed 1 cent higher or 8.85% up on Aug 13 at $1.23.
