Olam Group H1 Profit Inches Higher; Additional Restructuring Ahead

Olam Group Ltd (SGX:OLAG), a Singapore-based commodity trader, reported a slightly higher profit for the first half of 2022 and said it was investigating "strategic options" for two further subsidiaries.

Friday, the largest coffee dealer in the world said that its net profit attributable to shareholders for the six months ending June 30 increased 1.8% to S$429.1 million ($313.2 million). The increase in revenue to S$28.45 billion can be attributed to the increase in commodity prices.

Despite instability in commodities markets owing to the Russia-Ukraine conflict and COVID lockdowns in China, Olam's agri products segment, which trades in food and industrial goods, remained the largest revenue generator.

Due to worldwide market volatility, Olam's costs increased by roughly 25%.

The company stated that it remains dedicated to spinning off its food ingredients business, OFI, via a London IPO, but was waiting for market circumstances to improve. The company did not provide a specific date for the IPO, which had been scheduled for 2021.

OFI- which trades in coffee, chocolate, and edible nuts- contributed around fifty percent of Olam's first-half income. The group had originally intended to issue the IPO in the June quarter, but due to weak market circumstances, it was postponed indefinitely.

The company described its outlook for the remainder of 2022 as "cautiously positive" and anticipates Olam Agri to post a greater result than in 2021.

Olam also stated that it will evaluate "strategic alternatives" for its venture capital and technology and business services divisions as part of a five-year strategy to narrow its focus and boost its profits.

As part of the plan, the firm reported continuous success in divesting less significant assets and monetizing "gestating" assets.

In the second half of 2022, Olam expects to incur further one-time costs related to the reorganization, but at a slower rate than in 2021.