Financial results

Olam reports robust 2020 performance

By Anthony Myers

- Last updated on GMT

Olam expects a more favourable market condition in 2021, after posting a strong set of results. Pic Olam International
Olam expects a more favourable market condition in 2021, after posting a strong set of results. Pic Olam International

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Olam has reported a strong operating performance across its new structure, which includes its cocoa business in Olam Food Ingredients (OFI).

The company said revenue was up 3.3% to S$12.5bn ($9.1bn), mainly driven by volume growth as well as higher average selling prices in the Value-added Food Ingredients & Solutions segment.

Results Snapshot

  • H2 2020 Operational PATMI up 90.1% to S$475.7 million
  • Lower reported PATMI in H2 2020 (-S$87.0 million) and 2020 (S$245.7 million) from prudent one-off impairment mainly from Olam Palm Gabon (OPG)
  • Strong operating performance growth of 43.3% for OFI in H2 2020 after Covid-19 impact in H1 2020
  • Strong operating performance growth of 40.3% for OGA in 2020
  • Significant progress on Re-organisation Plan with planned IPO of OFI by H1 2022 and de-merger from Olam Group in conjunction with the IPO; Pursuing similar strategic options for OGA in parallel
  • Board of Directors recommends a final dividend of 4.0 cents per share; total dividend for 2020 would be 7.5 cents per share (2019: 8.0 cents)

EBIT growth was strong at 43.3% in H2 2020. Although EBIT for 2020 was down 2.8% to S$771.1m because of the Covid-19 impact in H1 2020 on cocoa processing and the Australian Almond business.  In a statement, the company said the overall results represent a strong, resilient performance in 2020 considering 2019 was an exceptional year when the cocoa business had a stellar performance. All other businesses including coffee, dairy, spices and other nuts delivered better earnings than the prior year.

Olam Group Executive Director and CEO of OFI, A.Shekhar said: “2020 was an exciting first year for OFI. We bounced back from the impact of Covid-19 in the first half, to deliver very strong earnings growth in second half. Our resilient all-round performance despite the pandemic is very encouraging and the positive trajectory of growth in the second half of the year gives us every reason to be optimistic about 2021 and beyond​.”

Significant progress

Olam Co-Founder and Group CEO, Sunny Verghese said: “We delivered strong growth in Operational PATMI of 36.0% to S$677.8m for 2020, reflecting the strength of our operating groups and their constituent businesses. We delivered this strong set of results while achieving significant progress in our transformative re-organisation Plan and we are excited about the sustained value creation potential arising from this re-organisation.

Our success is underpinned by a radically different sustainability offering, enabled by technology that has strengthened our strategic partnerships with our customers. This performance is also a result of the skill and resourcefulness of our team to capture market opportunities, strong risk management discipline and demonstrated operational capability​.

Olam International is a leading food and agri-business supplying food, ingredients, feed and fibre to 17,300 customers worldwide.

The Group has recently been re-organised into two new operating groups Olam Food Ingredients (OFI) and Olam Global Agri (OGA) with the Company Olam International (OIL) as parent holding the two groups.

We are particularly pleased to have successfully navigated through Covid-19 thus far by focusing on the safety and wellbeing of our employees, ensuring food safety to our customers, robust business continuity plans in each of our sites and locations, managing through demand, supply and financial shocks, and partnering with our communities to support them with Covid-19 assistance and resilience measures​,” said Verghese.

We are seeing market conditions and sentiments beginning to improve as economies snap back from the worst impacts of Covid-19 in 2020 and we expect this favourable market environment to continue to improve in 2021​.”  

Related topics Commodities Cocoa COVID-19

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