Olam reports 14% lower 3Q earnings on coffee, peanuts and commodity financial services
SINGAPORE (Nov 14): Olam reported 3Q18 earnings of $20.7 million, down 14.2% from a year ago against a strong 3Q17, mainly due to lower contribution from coffee, peanuts and Commodity Financial Services (CFS). This brings 9M18 earnings to $272.6 million, down 13.6% y-o-y.
Revenue for 3Q18 rose 23.6% to $8.3 billion on the back of a 66.4% increase in volume traded to 9.7 billion MT. As a result, revenue for 9M18 came in 15.7% higher at $22 billion on the back of a 57.8% rise in volume to 23.3 billion MT.
9M18 EBITDA for Edible Nuts, Spices & Vegetable Ingredients (SVI) fell by 18.3% to $277.0 million, impacted by the peanut businesses in Argentina and the US, which offset the improved performance by SVI, excluding tomato processing.
9M18 EBITDA for Confectionery & Beverage Ingredients improved 12.1% to $278.9 million as strong performance in the cocoa supply chain and processing compensated for weaker results from coffee, which continued to face difficult market conditions.
9M18 EBITDA for Food Staples & Packaged Foods declined 14.6% to $248.7 on lower contribution from Edible Oils, Sugar and Dairy, which offset the improved results from Grains and Packaged Foods.
9M18 EBITDA for Industrial Raw Materials, Agricultural Logistics & Infrastructure fell 4.8% to $132.4 million on relatively lower contribution from cotton, which offset growth from GSEZ, wood products and rubber.
CFS reported higher 9M18 losses of $31.9 million mainly due to losses from the funds business.
While global markets are experiencing heightened political and economic uncertainties, Olam believes its diversified and well-balanced portfolio provides a resilient platform to navigate the challenges in both the global economy and commodity markets.
“Olam will continue to execute on its 2016-2018 Strategic Plan for the rest of 2018 and focus on growing its prioritised platforms, turning around underperforming businesses, ensuring gestating businesses reach full potential and delivering positive free cash flow,” says the group in its filing.
Year to date, shares of Olam are down 13.2% to close at $1.77 on Tuesday before the results announcement.
