Olam Quarterly Profit Slides 30% as One-Time Gain Not Repeatedby
Operating earnings climb 6.2%; Net gearing level reduced
Lower sales of grains, sugar and rice slice food earnings
Olam International Ltd., the Singapore commodity trader controlled by the city’s state investment company, reported a 30 percent drop in third-quarter profit after a one-time gain in the same period a year ago wasn’t repeated and sales of food staples declined.
Net income was S$31 million ($22 million) compared with S$44.3 million a year earlier, Olam said Friday in a statement. The year earlier result was boosted by one-time gain of S$12.1 million. Operational profit after tax and minority interest rose 6.2 percent to S$34.2 million.
Sales in all of the company’s units increased in the quarter excluding the staple and packaged food unit, which dropped 31 percent on lower prices and volumes of grains, sugar and rice. The Uruguayan dairy unit also continued to underperform, with Olam flagging a likely one-time charge on the unit this quarter.
“We are pleased with the continued improvement in operational performance across most of our business segments while we work on restructuring the upstream dairy operations in Uruguay,” Shekhar Anantharaman, Olam’s executive director of finance and business development, said in the statement.
Olam dropped 1 percent to S$1.965 at 9:57 a.m. in Singapore, taking its decline for the year to 2.7 percent. The trading firm, which has sold stakes in Australian grain and its packaged food businesses, completed the $1.2 billion acquisition of Archer-Daniels-Midland Co.’s cocoa business in October, becoming the world’s third-largest processor.
“The acquisition of ADM Cocoa makes us one of the top three integrated cocoa beans and products suppliers in the world, effectively transforming our competitive position in the industry,” Chief Executive Officer Sunny Verghese said in the statement.
Olam’s net gearing as of Sept. 30 was 1.43 times, lower than the 1.85 times reported at the end of December 2014, the company said in the statement.