Olam Group expects agricultural unit’s dual IPO in Singapore and Saudi Arabia by the first half of 2024.

Olam Group expects agricultural unit's dual IPO in Singapore and Saudi Arabia by the first half of 2024.

Olam Group Targets IPO for Agricultural Unit by First Half of 2024

Singapore’s Olam Group has announced its plans to target the initial public offering (IPO) of its agricultural unit by the first half of 2024. This news comes as the commodity trader reports a significant decrease in first-half profit, mainly stemming from lower crop yields in its almond orchards in Australia.

Olam Group had initially planned for the dual listing of its Olam Agri unit in Singapore and Saudi Arabia to be completed in the first half of this year. However, in May, the company stated that this timeline would not be met. The IPO of Olam Agri will now take place before the listing of Olam Food Ingredients, as part of the company’s broader business overhaul.

With Olam Agri specializing in the trading of grains and animal feed, edible oils, rice, and cotton, the unit saw its first-half earnings before interest and tax (EBIT) fall by 9%. This decline in profits is primarily attributed to various factors, including lower bee activity during pollination and adverse weather conditions such as unseasonal cold and excessive rain and flooding.

The unexpected drop in yield and quality of the 2023 almond crop in Australia has presented challenges for Olam Group. The company’s almond orchards were significantly affected by the aforementioned factors, leading to a decrease in both yield and quality. These adverse conditions have weighed on Olam Group’s profitability for the first half of the year.

Despite these challenges, Olam Group remains determined to overcome them. CFO N Muthukumar acknowledges that the company has been budgeting for higher interest costs while optimizing cost structures overall. However, he also emphasizes that Olam Group is not immune to the near-term impact of rapid benchmark interest rate hikes affecting companies globally.

On a more positive note, the company’s food ingredients segment, which focuses on the trading of cocoa, coffee, nuts, dairy, and spices, experienced a 3.4% increase in EBIT. This successful performance provides some balance to the overall financial results of Olam Group.

Overall, even though Olam Group reported a profit decline of 88.8% for the first half of the year, the company shows resilience in the face of challenges. By targeting the IPO of its agricultural unit by the first half of 2024, Olam Group aims to further strengthen its position in the market. The company’s determination to adapt and optimize its operations demonstrates its commitment to delivering value for its stakeholders.

In light of these developments, Olam Group has declared an interim dividend of 3 Singapore cents per share, compared to 4 Singapore cents per share in the previous year. The company’s ongoing efforts to navigate the complexities of the agricultural industry amidst changing market conditions position it for future growth and success.

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