Olam Group (OLAG.SI), a prominent player in the global agricultural commodities market, announced its plans for the initial public offering (IPO) of its agricultural unit, Olam Agri, with a dual listing in Singapore and Saudi Arabia.
The company targets the first half of 2024 for the completion of this landmark IPO. The announcement was made alongside the disclosure of the group's financial performance for the first half of the year, which saw an 88.8% decline in profit due to challenges in its almond orchards in Australia.
Initially, Olam Group had aimed to finalize the dual listing of Olam Agri in both Singapore and Saudi Arabia within the first half of the current year. However, due to unforeseen circumstances, the company adjusted its timeline. The IPO of Olam Agri will be followed by the listing of the Olam Food Ingredients unit as part of the company's strategic restructuring.
Olam Agri, renowned for trading an array of commodities including grains, animal feed, edible oils, rice, and cotton, faced a 9% decline in earnings before interest and tax (EBIT) during the first half of the year.
The financial report for the first half of the year highlighted an attributable profit of $35.6 mn for Olam Group, a substantial decrease from $317.5 mn reported during the same period last year. The drop in profit was significantly impacted by a range of factors including decreased crop yield from almond orchards in Australia.
In recent months, Olam Group encountered challenges linked to lower bee activity during the pollination process, along with adverse weather conditions such as unseasonal cold spells and excessive rainfall, which collectively contributed to a surprising decline in yield and quality of the 2023 almond crop in Australia.
CFO Neelamani Muthukumar emphasized the company's proactive approach to managing costs and addressing interest rate fluctuations.
"We have been budgeting for higher interest costs and optimizing cost structures overall. We are, however, not immune to near-term impact from rapid benchmark interest rate hikes affecting companies globally," he noted.
On a more positive note, the food ingredients segment of Olam Group, responsible for trading cocoa, coffee, nuts, dairy, and spices, experienced a 3.4% increase in EBIT during the same period.
To provide returns to its shareholders, Olam Group declared an interim dividend of 3 Singapore cents per share, a slight reduction from the 4 Singapore cents declared in the corresponding period of the previous year.
As the company navigates through challenges and opportunities, Olam Group's strategic focus on restructuring its business units and pursuing dual listings signals its commitment to adapting and evolving within the ever-changing global commodities landscape.
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