Digital Assets in Capital Markets

Advanced course on digital assets - assets created using a blockchain/DLT network - designed for finance professionals.

IBF-STS
8 CACS CPD Hours

15 November 2022 (Tuesday) | 9am-5pm

Singaporean agri-major Olam International reported strong revenue growth for 1H of 24.6% YoY to S$28.45bn ($20.8bn) from increased prices across many products and commodities such as grains and oilseeds, cotton, edible oils, coffee, and dairy. However, profit growth was muted, up 3.1% YoY to S$394.4mn ($287.5mn) on higher finance costs due to rising interest rates, taxes, and higher one-off exceptional charges related to the firm’s reorganization. Breaking down its revenues by divisions, Olam Agri’s revenue increased 26.2% to S$19.6bn ($14.3bn) and Ofi grew 22.1% YoY to S$8.1bn ($5.9bn). Overall, EBIT grew by 25% YoY to S$802.1mn ($585.1mn) on strong earnings contribution from Olam Agri. Net finance costs rose by 37% YoY to S$270.1mn ($197mn) due to higher borrowings from the increase in fixed and working capital, and increase in interest rates. On the balance sheet front, Olam had gross debt of S$19bn ($13.9bn) compared to cash holdings of S$6.4bn ($4.7bn) and available liquidity of S$24.3bn ($17.7bn) with stable gearing at 1.73x. In 1H, Ofi raised $275mn through 5-year (3.05% coupon) and 7-year (3.25% coupon) notes, while Olam Agri secured a $745mn financing facility from banks in the UAE and a loan of $200mn from the IFC.

Olam Co-Founder and Group CEO, Sunny Verghese said, “Olam is committed and fully prepared to pursue an Ofi IPO and demerger pending favourable market conditions, with a primary listing on the premium segment of LSE and a concurrent listing in Singapore. A strategic partnership with SALIC expected to close by the end of the year will further catalyze Olam Agri’s growth. We are exploring a sale of an additional 10% stake in Olam Agri to potential investors and/or prepare Olam Agri for an IPO and demerger based on market conditions.” The company announced a interim dividend of S$0.04 ($0.03) /share.

Olam’s SGD 5.375% Perps traded lower 0.17 points to 93.93 to yield 7.17%.

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