Olam International Ltd., the Singapore commodity trader controlled by the city’s state investment company, said second-quarter profit tripled as earnings from its food units increased.
Net income was S$94.7 million ($67.8 million) compared with S$31.8 million a year earlier, Olam said in a statement. Operational profit after tax and minority interest, which doesn’t count one-time items, almost doubled to S$95.2 million spurred by U.S. sales of nuts and spices, higher cashew and almond prices, and more cocoa and coffee sold. Total revenue fell 16 percent to S$4.81 billion on lower trade volumes.
The trading firm has spent two years adjusting its assets, selling stakes in Australian grain and its packaged food businesses, while expanding in cocoa. Already one of the world’s top three traders of coffee and rice, Olam agreed to pay a company record $1.3 billion to Archer-Daniels-Midland Co. for its cocoa business, a move that would elevate it into the top-three processors of the bean.
Olam said Friday it expects the ADM sale to close in the last three months of this year. U.S. farm producer marketing firm McCleskey Mills Inc., which Olam agreed to buy last year, has now started to contribute to earnings, the trading firm said.
“We continue to expand selectively” while reducing the presence or exiting from lower-margin businesses, Chief Executive Officer Sunny Verghese said in the statement.
Earnings before interest, tax, depreciation and amortization at Olam’s food units rose 22 percent to S$233.1 million. The Ebitda of the industrial raw materials unit, which includes cotton and timber trading, fell 22 percent.
A continuing problem area for Olam continues to be its dairy business in Uruguay, the company said. As such, Olam will delay further planned investment there and again restructure the unit. This will incur one-time costs this half, Olam said.
Over the first six months, Olam posted free cash flow of S$135 million. It will pay a first-half dividend of 2.5 Singapore cents a share.