Olam Group has reported patmi of $323.8 million for 1HFY2025 ended June 30, more than four times higher y-o-y at a 573.2% surge.
Revenue during the period rose 49.9% y-o-y to $15.3 billion, while reported operating profit (or ebit) rose 85.5% y-o-y to $708.7 million. Including Olam Agri, or “discontinuing operations”, ebit was up 35.5% y-o-y to $1.2 billion.
The group has declared an interim dividend of 2 cents per share.
The group announced on Feb 24 that it has agreed to sell its remaining 64.57% interest in Olam Agri to Saudi Agricultural and Livestock Investment Company (SALIC) in two tranches: 44.58% (Tranche 1) and 19.99% (Tranche 2) at the end of three years, post Tranche 1 completion.
Given the conditional 100% sale of Olam Agri has been approved by shareholders on July 4, Olam Agri, excluding entities to be retained by Olam Group, is classified as a disposal group with assets and liabilities held for sale and defined as “Olam Agri (discontinuing operations)” in the 1HFY2025 results.
The results of retained entities are included under the remaining Olam Group’s continuing businesses within the group’s consolidated results.
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“We therefore present the full results for ofi and remaining Olam Group as “continuing operations” and consolidate only the profit or loss of Olam Agri (discontinuing operations) in its aggregate group profit or loss. This approach will be adopted until the sale of the 44.58% stake in Olam Agri is completed,” says Olam in its results release on Aug 14.
Excluding one-off items, core patmi (or operational patmi) grew to $327.1 million on improved performance by ofi and the remaining Olam Group.
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Free cash flow to equity (FCFE) improved to negative $945.3 million from negative $5.4 billion this time last year due to “substantially lower” working capital deployment, says the group.
Net gearing increased slightly to 2.83 times from 2.60 times previously, due to higher working capital, leading to an increase in borrowings.
To-date, ofi has secured total loan facilities amounting to US$2.45 billion, while Olam Agri has secured total loan facilities totalling US$3.85 billion for refinancing of their existing loans and for general corporate purposes.
Following the announcement of the proposed sale of the remaining 64.57% stake in Olam Agri to SALIC, Olam Group has committed to “right-size” the remaining Olam Group’s capital structure by allocating approximately US$2 billion to “de-lever its balance sheet and make it debt-free and self-sustaining”.
The group had also committed to invest US$500 million of equity into ofi, which was completed before end-June.
The group has also committed to “responsibly divest and monetise” all of the remaining Olam Group’s assets and businesses over time and “progressively distribute” the net proceeds to shareholders via special dividends.
Separately, the group announced in April the sale of its remaining 32.4% stake in ARISE P&L for US$175 million and expects this transaction to close in 2025.
Olam Group co-founder and CEO Sunny Verghese says: “We delivered strong patmi growth on the back of operating profit growth in 1HFY2025 despite volatile and adverse macroeconomic and geopolitical conditions. We are encouraged by the steady progress achieved in executing our updated 2025 reorganisation plan to unlock value for our shareholders. Pursuant to the proposed sale of Olam Agri to SALIC and the plan to responsibly divest the assets and businesses of the Remaining Olam Group, our focus is to prioritise ofi and support its efforts in realising its full potential value.”
Shares in Olam closed 1 cents higher, or 0.96% up, at $1.05.
