Olam, Singapore owner of Argentine and Uruguay farms profit slumps
Photo: CEO Sunny Verghese Olam
Olam International Ltd., a Singapore commodity trader controlled by the city’s state investment company and owner of considerable land holdings in South America, reported a 30 percent drop in third-quarter profit as sales of food staples declined and subsidiary like New Zealand Farm Systems continued to struggle. Olam purchased 100% of NZFS in 2012 from its New Zealand based shareholders hoping to turn this 49 farm, 85,000 stock units around from previous years of below par results by the previous owners. In the end they have proved to date not to be able to do this.
Since 2007 they have also operated in Argentina in a location close to Cordoba producing a range of food products from rice to peanuts with some success.
A recent press release shows Net income was S$31 million ($22 million) compared with S$44.3 million a year earlier. 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 has also continued to underperform, with Olam flagging a likely one-time charge on the unit this quarter.
They said “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.
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.
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