Olam profits up on higher volumes of coffee, cocoa

By Dominique Patton

- Last updated on GMT

Related tags Milk

Singapore-based coffee, nuts and cocoa group Olam reported much
improved profits for 2006, thanks to significantly higher volumes
across all its segments as well as better product pricing.

The company said yesterday that net profits reached S$87.2 million (€43.2m) for the year ended 30 June, up by 32.3 per cent over 2005.The surge in profits was attributed to record sales of S$4.36 billion, an increase of 29.4 per cent.

"This strong improvement in earnings is the result of robust growth in both sales volumes and higher net contribution across all the four business segments," said the company in a statement.

In the confectionery and beverage ingredients division, which sells coffee, cocoa and shea nuts and contributes the biggest revenues to the group, sales were up 27.1 per cent to S$1.7 billion, with volumes rising by almost a quarter to more than 734,000 tons.

Olam said both coffee and cocoa contributed to the growth, with coffee volumes up by 28 per cent thanks to strong demand for both Arabica and Robusta.

Olam claims to be the largest shipper of Robusta -used predominantly in instant coffee -in the world, and currently facing tight supply.

Origin processing of cocoa in Nigeria and the supply of customized grades like sustainable cocoa from Indonesia and Cote d'Ivoire boosted margins in the cocoa business.

Rice volume and margin were also up despite trading conditions, said Olam.

"The group was able to successfully introduce and expand the sale of premium rice in West Africa across several markets in the fourth quarter.

Margins improved with processing and rice milling initiatives in Nigeria and India," it said.

The dairy products business also saw a surge in sales, after Olam launched milk powder in Russia and started a new dairy distribution operation in China.

It has also added whey powder, sourced from the US, and cheese to its portfolio.

In the nuts, beans and spices unit, sales volumes grew 22 per cent over the year to 482,000 tons but revenue only moved by 3.8 per cent to $566.8 million.

However the company still reported a 17 per cent rise in profits from the segment, thanks to higher volumes and efficiency.

The group recently announced it would start processing peanuts in China and has also leased a facility in Argentina to expand its processing capacity for this product.

Related topics Commodities Cocoa

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