Press Release

Olam Group Financial Performance 

Olam Group, a global food and agri-business, today reported robust EBIT growth for H1 2022 as it continues the Re-organisation of its businesses.

H1 2022 

• PATMI was marginally up by 1.8% to S$429.1 million as strong EBIT growth was partly offset by higher finance costs amid a high interest rate environment, taxes and higher one-off exceptional charges related to the Re-organisation
• Excluding exceptional items, Operational PATMI was up 8.2% to S$472.5 million
• Revenue increased 24.6% year-on year on higher prices across many products and commodities in H1 2022
• EBIT grew 25.0% to S$802.1 million mainly due to the strong earnings contribution from Olam Agri where it contributed 75.9% of total Group EBIT, ofi contributed 33.0% and the Remaining Olam Group -8.9%. 
• Free Cash Flow to Equity swung back to positive at S$465.7 million (H1 2021: -S$398.3 million) on strong operating profits and much lower capital expenditure. 
• Net gearing was at 1.73 times (H1 2021: 1.60 times; H2 2021: 1.72 times)

H1 2022 Performance by Operating Group⁽³⁾

ofi⁽⁴⁾

ofi is a global leader in ingredients at the forefront of food and beverage consumer trends offering sustainable, natural and plant-based ingredients and solutions and serving large, attractive and high growth end-use categories.

• Revenue increased 22.1% to S$8.1 billion on the back of higher sales volume of 3.1% and higher sales prices across both Ingredients & Solutions and Global Sourcing.
• EBIT decreased 11.8% to S$265.0 million against the very strong comparative period. This was after absorbing the inflationary pressures especially the sudden surge in energy costs, as well as additional depreciation and amortisation due to various acquisitions concluded last year.

CEO of ofi, A. Shekhar said:“We are pleased with the steady first-half performance, which must be seen in the context of a very strong H1 2021 and which is after absorbing the sudden surge in input costs and increased depreciation. We are encouraged by the broad-based support from our customers for appropriate revisions in pricing against these cost increases, which is a further validation of their confidence in our ability to deliver surety of supply and cost competitiveness even in this challenging environment. It also demonstrates the strength of the integrated platforms and the resilience of the portfolio.

“We continue to make disciplined investments across our portfolio and have recently acquired two businesses to support our private label thrust: Club Coffee - one of Canada’s largest roasters and packaging solutions providers to the ‘At Home’ segment; and Märsch - one of Europe’s leading private label nuts manufacturers. Our on-trend ingredients portfolio, the integrated global network, and ability to service large, attractive and growing end-use categories, makes us a compelling investment case for anyone looking to tap into growing global demand for food & beverages that are healthy, tasty and sustainable.”

Olam Agri⁽⁵⁾

Olam Agri is a market leading and differentiated food, feed, and fibre global agri-business focused on high-growth emerging end-consumption markets to meet the rising demand for food staples, agri-industrials raw materials and the shift to protein-based diets in these countries.

• Olam Agri delivered yet another strong first-half in 2022 with broad-based growth, along with top-line, bottom-line and margin growth in all segments.
• Revenue grew 26.2% to S$19.6 billion, with all three segments contributing to growth. 
• EBIT rose by 49.4% to S$608.8 million and margin per tonne grew 48.7% as all segments grew strongly.

Mr Verghese, who is CEO of Olam Agri said:“Olam Agri has maintained its outstanding growth track record of delivering operating earnings (EBIT) CAGR⁽⁶⁾ of 46.7% between 2018 and 2021 with yet another strong performance in H1 2022 as the business continued to capture opportunities from favourable structural growth trends while skilfully navigating supply chain risks and disruptions first from the pandemic and then from the Russian-Ukraine war.

“All three Olam Agri segments – both the Food & Feed segments as well as the Fibre, Agri-industrials & Ag Services segment – grew top-line, bottom-line and margins substantially and was the main contributor to the Group’s first-half performance. Olam Agri is poised to build on its track record by taking advantage of the rising demand for food staples and agriindustrials raw materials as well as the shift to protein-based diets in high-growth emerging end-consumption markets.

“Its Strategic Supply and Cooperation agreement with its strategic partner SALIC will also catalyse its growth in the Gulf region.

“The reopening of the Ukraine grains shipment corridor is expected to gradually ease future shipments of essential food staples and grains from Ukraine and Russia to improve the current global food security crisis and restore global trade flows.”

Remaining Olam Group

The Remaining Olam Group is responsible for the divestment of non-core assets and businesses (“De-prioritised/Exiting Assets”), nurturing and partially or fully monetising three gestating businesses Olam Palm Gabon, Packaged Foods, and ARISE Ports & Logistics (“Gestating businesses”) and developing Rusmolco, the Russian dairy farming business (“Continuing Business”). It is also responsible for incubating new sustainability and digital platforms for growth (Olam Ventures) and providing IT, digital and shared services to the operating groups as well as to third parties (OTBS).

• Revenue was up 11.4%, supported by higher prices that helped to offset lower volumes post divestments and closures of de-prioritised assets.
• EBIT losses increased to S$71.8 million (H1 2021: -S$66.4 million) mainly due to the increase in losses from Continuing/Gestating Businesses.

Outlook and Prospects

The significant demand growth rate and pick-up seen in H2 2021 has slowed down in H1 2022 after the geopolitical crisis, accompanied by the hard pandemic lockdowns in China.

ofi continues to make targeted investments across its portfolio to support its private label thrust and is well-positioned for 2022 as the revised sales pricing and margin recovery gathers pace in H2 2022.

Riding on its strong growth and outperformance in H1 2022, Olam Agri expects to deliver a better year-on-year performance for 2022 while navigating the heightened geopolitical and macroeconomic risks.

In light of the current high commodity price and rising interest rates environment, the Group will continue to focus on managing its working capital in a disciplined manner.

The Group expects to incur additional one-off and non-recurring expenses associated with the Re-organisation Plan in H2 2022 although these expenses for the full year are expected to be lower than the total recorded for 2021.

Overall, given the H1 2022 results and barring any unforeseen circumstances or unfavourable geopolitical, macroeconomic and pandemic developments, the Group is cautiously optimistic about its prospects for the rest of 2022, even as the industry continues to see strong underlying demand amid tight supplies.

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¹ Profit After Tax and Minority Interest

² Saudi Agricultural and Livestock Investment Company

³ Post H1 2021, certain businesses were transferred between operating groups. The Coffee plantation business was transferred from Remaining Olam Group to ofi (as part of Global Sourcing) and ofi’s Russian operations (primarily comprising the Rusmolco dairy farming operations, also a part of Global Sourcing) were transferred from ofi to Remaining Olam Group.

⁴ Consisting of the Cocoa, Coffee, Dairy, Nuts and Spices businesses, ofi is made up of two segments – Global Sourcing and Ingredients & Solutions. 

⁵ Consisting of Grains & Oilseeds, Integrated Feed & Proteins, Edible Oils, Rice, Specialty Grains & Seeds, Cotton, Rubber, Wood Products and Commodity Financial Services businesses. Olam Agri has three segments – Food & Feed - Origination & Merchandising; Food & Feed - Processing & Value-added; and Fibre, Agriindustrials & Ag Services.

⁶ Compound Annual Growth Rate

Notes to Editors

Re-organisation of Olam

Olam Group has been re-organised into new operating groups ofi, Olam Agri and the Remaining Olam Group.

ofi is a global leader in ingredients at the forefront of food and beverage consumer trends offering sustainable, natural and plant-based ingredients and solutions and serving large, attractive and high growth end-use categories.

Olam Agri is a market leading and differentiated food, feed, and fibre global agri-business focused on high-growth emerging end-consumption markets to meet the rising demand for food staples, agriindustrials raw materials and the shift to protein-based diets in these countries.

The Remaining Olam Group is responsible for the divestment of non-core assets and businesses and the development of Rusmolco and our gestating businesses Olam Palm Gabon, Packaged Foods, and ARISE Ports & Logistics. It is also responsible for incubating new sustainability and digital platforms for growth (Olam Ventures) and providing shared services to the operating groups as well as building technology and business solutions to third party services (Olam Technology and Business Services).