Olam’s Third-Quarter Profit More Than Triples on Valuation Gain

Olam International Ltd. (OLAM), the Singapore commodity trader being taken over by the city’s state investment company, said third-quarter profit more than tripled on gains related to the revaluation of holdings in a Malaysian maker of natural sweeteners and other items.

Net income was S$396.1 million ($317 million) in the three months ended March 31, compared with S$108.5 million a year earlier, Olam said today in a statement. Operating profit after tax and minority interest fell 16 percent to S$102.2 million.

Profit was boosted with the help of a S$271 million gain from the revaluation of Olam’s holding in PureCircle Ltd. PureCircle was re-classified as an available-for-sale asset from an “investment in an associate” after Olam Chief Executive Officer Sunny Verghese resigned from PureCircle’s board. Olam’s holding in the maker of natural sweeteners is less than 20 percent, the trader said.

Breedens Investments Pte, a unit of Temasek Holdings Pte., is leading a S$5.3 billion offer for Olam, one of the world’s top three coffee and rice traders, as agricultural assets attract bidders seeking exposure to rising global food demand. The acquisition would draw a line under 2012’s short-seller attack on Olam by Muddy Waters LLC, which questioned its finances and caused its stock to plummet.

Olam’s shares have since recovered from a December 2012 low of S$1.395, and in Singapore yesterday were little changed at S$2.23. Its earnings came before the market open.

Operating profit fell on higher depreciation and tax expenses. The value of biological assets fell by S$26.4 million from a gain a year earlier, Olam said.

Commodity sales volumes rose 3.5 percent in the quarter, Olam said. Revenue advanced 2.5 percent to S$4.84 billion from S$4.72 billion.

Temasek was Olam’s second-largest shareholder when Muddy Waters made its criticisms public. Breedens’s offer of S$2.23 a share turned unconditional last month and will remain open until May 23. As of May 12, its group had secured 64 percent of Olam’s shares.

To contact the reporter on this story: Yuriy Humber in Tokyo at yhumber@bloomberg.net

To contact the editors responsible for this story: Jason Rogers at jrogers73@bloomberg.net Madelene Pearson

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