Olam reports robust 2020 performance amid the pandemic, with 36.0% growth in Operational PATMI to S$677.8 million
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)
Management Comments on Consolidated Olam Group Performance and Outlook
Olam Co-Founder and Group CEO, Sunny Verghese said:
Our strongest operational earnings since inception reflect the underlying strength and resilience of our businesses despite the impacts of Covid-19 and is a testament to the strength of our business model, commitment of our people and depth of our customer and supplier partnerships across more than 60 countries.
“We continue to execute our Re-organisation with ofi’s planned concurrent listings in London and Singapore, representing the best combination of listing venues. We are excited about the prospects of listing ofi as an attractive play for the growing demand for natural, plant-based ingredients and value-added solutions, which are sustainably sourced and traceable. Separately, we are evaluating various strategies to maximise OGA’s long-term growth potential and value enhancement within the Group as it continues with its plan for carve-out, potential IPO and demerger by H1 2023.”
"Looking forward, we expect our industry to continue its recovery in the second half of the year, benefiting from the tailwind of favourable macro conditions following the snap back from the worst impacts of Covid-19. Notwithstanding the differential impact of Covid-19 globally, Olam continues to play an important role in providing essential food staples, food ingredients, feed and fibre to customers around the world in a safe, responsible and sustainable way."
“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.”
Olam Group CFO, N Muthukumar said:
“Even as we deployed significant capital expenditure for organic growth and strategic acquisitions, we continued to maintain a robust balance sheet, further strengthened by the recently concluded rights issue.
“We continued to diversify funding sources and innovate on financing, including a unique two-tier AtSource-linked sustainability financing facility aggregating US$1,450 million. We continue to make good progress on our Re-organisation Plan and will formalise the cost plans and capital structure for ofi and OGA, to meet their respective needs, while driving profitable growth and improving returns.”
2020 Performance by Operating Group
olam food ingredients(ofi)1
A global leader offering sustainable, natural, value-added food ingredients, so consumers can enjoy the healthy and indulgent products they love.
Revenue was up 3.3% to S$12.5 billion, mainly driven by volume growth as well as higher average selling prices in the Value-added Food Ingredients & Solutions segment.
EBIT growth was strong at 43.3% in H2 2020. Although EBIT for 2020 was down 2.8% to S$771.1 million because of the Covid-19 impact in H1 2020 on Cocoa processing and the Australian Almond business, 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 like Coffee, Dairy, Spices and other Nuts delivered better earnings than the prior year.
A. Shekhar, CEO, ofi 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.
“We are thankful for the strong support from our customers with whom we worked very closely to manage the many supply chain challenges during the year, as well as co-creating innovative and sustainable solutions that enable them to tap into ever-evolving consumer preferences.
“We are making disciplined and deliberate investments to back our refreshed strategy as demonstrated by the recent acquisition of the US-based chilli pepper business, as well substantive greenfield commitments behind a soluble coffee manufacturing plant in Brazil and a Dairy processing plant in New Zealand. These will position us for delivering sustained growth as we look to carve out ofi and plan for an IPO and concurrent de-merger in the first half of 2022.”
**Olam Global Agri (OGA)**2
OGA is a market leading and differentiated global food, feed and fibre agri-business with a proven track record delivering high returns focused on high-growth emerging markets.
Strong operating performance with revenue up 14.1% to S$21.5 billion, mainly driven by higher volumes as well as higher prices in food staples, including Grains, Rice and Edible Oils.
EBIT was up 40.3% at S$462.4 million on higher contribution from the Food & Feed segments, both its Origination & Merchandising as well as Processing & Value-added segments, particularly in the Grains origination & merchandising, Grains milling, Animal Feed and Rice distribution in Africa, as the Covid-19 outbreak stimulated rising pantry restocking effects and drove greater demand for these food staples.
Commodity Financial Services business also contributed to OGA’s improved performance in 2020.
Olam International Limited (OIL)3
As parent company of ofi and OGA, OIL plays a key role to unlock the full value of the Olam Group by providing active stewardship to the new operating groups, responsibly divesting the de-prioritised businesses and assets, nurturing gestating businesses to full potential, incubating new engines for future growth, developing key cross cutting initiatives, and providing shared services to the new operating groups.
Lower revenue of 12.0% to S$1.8 billion with the closure of the Sugar, Rubber and Fertiliser trading desks, the Fundamental Fund, Wood Products business in Latin America and Olam Tomato Processors in California.
EBIT was lower by 149.2% with a loss of S$164.0 million due to the closure of these businesses and the impact of Covid-19 on the three Gestating Businesses (OPG, Packaged Foods and the ARISE Infrastructure & Logistics business).
Notes to Editors
This release should be read and understood only in conjunction with the full text of Olam International Limited’s Second Half and Full Year ended December 31, 2020 Financial Statements and Management Discussion and Analysis, its announcement and news release entitled “Re-organisation of Olam: Unlocking Long Term Value” and “Significant progress in Re-Organisation Plan to unlock long-term shareholder value” lodged respectively on SGXNET on February 26, 2021.
Olam will host a webcast on February 26, 2021, at 10.30 am SGT to discuss the financial results and provide a company update. To access the webcast or download the presentation materials, go to www.olamgroup.com.
Re-organisation of Olam: Olam Group has been re-organised into two new operating groups olam food ingredients (“ofi”) and Olam Global Agri (“OGA”) with the Company Olam International (“OIL”) as parent holding the two groups. ofi is a global leader offering sustainable, natural, value-added food ingredients, so consumers can enjoy the healthy and indulgent products they love. OGA is a market leading and differentiated global food, feed and fibre agri-business with a particular focus in high-growth emerging markets with proven expertise, processing capabilities and a global origination footprint. As parent company of ofi and OGA, OIL plays a key role to unlock the full value of the Olam Group by providing active stewardship to the new operating groups, responsibly divesting the de-prioritised businesses and assets, nurturing gestating businesses to full potential, incubating new engines for future growth, developing key cross cutting initiatives, and providing shared services to the new operating groups.
H2 2020 and 2020 Financials for Olam Group Consolidated and Operating Groups
Revenue (S$ million)
EBIT (S$ million)
Revenue (S$ million)
EBIT (S$ million)
2020
YoY %
2020
YoY %
H2 2020
YoY %
H2 2020
YoY %
Olam Group
35,820.0
8.6
1,069.5
1.2
18,739.5
9.9
645.8
20.6
OFI
12,546.7
3.3
771.1
(2.8)
6,373.4
(1.5)
508.0
43.3
OGA
21,515.9
14.1
462.4
40.3
11,458.0
19.7
233.5
28.2
OIL
1,757.4
(12.0)
(164.0)
(149.2)
908.1
(9.5)
(95.7)
6,735.7
About Olam International Limited
Olam International is a leading food and agri-business supplying food, ingredients, feed and fibre to 17,300 customers worldwide. Our value chain spans over 60 countries and includes farming, processing and distribution operations, as well as a sourcing network of an estimated 5.0 million farmers.
Through our purpose to ‘Re-imagine Global Agriculture and Food Systems’, Olam aims to address the many challenges involved in meeting the needs of a growing global population, while achieving positive impact for farming communities, our planet and all our stakeholders.
Headquartered and listed in Singapore, Olam currently ranks among the top 30 largest primary listed companies in terms of market capitalisation on SGX-ST.
Since June 2020, Olam International has been included in the FTSE Good Index Series, a global sustainable investment index series developed by FTSE Russell, following a rigorous assessment of Olam’s supply chain activities, impact on the environment and governance transparency. The FTSE4Good Index Series identifies companies that demonstrate strong Environmental, Social and Governance (ESG) practices and is used by a variety of market participants to create and assess responsible investment funds.
More information on Olam can be found at www.olamgroup.com.
Olam is located at 7 Straits View, Marina One East Tower #20-01, Singapore 018936.
Telephone: +65 63394100, Facsimile: +65 63399755.
Issued on behalf of Olam International Limited by:
WATATAWA Consulting, 77 Robinson Road, Robinson 77 #33-00, Singapore 068896