Olam Group Ltd. said its first-half profit sank about 90% due to lower crop yield from its almond orchards, dealing a setback to the agricultural commodities trader that’s seeking to list its unit in Saudi Arabia.
(Bloomberg) — Olam Group Ltd. said its first-half profit sank about 90% due to lower crop yield from its almond orchards, dealing a setback to the agricultural commodities trader that’s seeking to list its unit in Saudi Arabia.
Profit in the first six months of the year fell to S$48 million ($35 million) from S$429 million a year earlier, the Singapore-based company said in a filing. It took a one-off, non-recurring charge from the poor almond crop yield in Australia, and reported higher costs due to a sharp increase in interest rates.
The weaker results come as the company has already faced a delay in its plan to list Olam Agri in Saudi Arabia in the first half. Olam said late May that it didn’t have all the regulatory approvals needed for the initial public offering, and would continue to pursue the listing at the next practical window.
It’s now targeting for Olam Agri’s IPO to take place by the first half of 2024, subject to obtaining all requisite approvals and prevailing market conditions.
Olam, which counts Singapore’s state-owned investment firm Temasek Holdings Pte. and Japan’s Mitsubishi Corp. as shareholders, announced the IPO plan for Olam Agri in January, saying it would be the first listing of a global firm in Saudi Arabia. There would be a concurrent dual listing of the unit in Singapore.
Olam Agri sells grains and seeds and produces everything from edible oils to pasta. It’s one of Olam’s main units, formed in a reorganization announced in early 2020. Olam targeted $600 million to $700 million in primary proceeds, and $300 million to $400 million in secondary proceeds from the IPO.
The listing of its other food ingredients unit, known as ofi, was supposed to take place after Olam Agri. Olam had planned a primary listing of ofi in London by the second quarter of 2022, but that was delayed due to the war in Ukraine.
Olam Chief Executive Officer Sunny Verghese said the company should have “reasonably strong earnings” over the full year, which will likely help it to pull off a successful IPO without any impact on valuation.
The firm expects its rice trading business to remain strong in the second half even though India, the world’s biggest exporter, has banned the overseas sale of some varieties. Lower volumes from India will be compensated by increased shipments from other exporting regions, Verghese said in an earnings briefing.
(Updates with CEO comments in final two paragraphs)
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