Sales from Olam's grains unit rise 4.7% in Q3

Singapore-based trader Olam International said its Food Staples and Packaged Food unit – which includes grains – achieved a 4.7% increase in shipments in the third quarter although revenue grew at a slower pace because of weaker prices, the company said in an earnings report on Wednesday. 

Olam said the unit shipped 8.63 million tonnes of grains, rice, nuts, edible oils dairy products and processed foods, up from 8.25 million tonnes from the equivalent period in 2018, adding that over the January-September period the units increase in sales driven in part by higher sales of grains.

“This [rise in volumes] was primarily due to food staples and packaged food volumes and due to grain trading operations,” chief financial officer Neelami Muthukumar told analysts on Wednesday. 

Revenue for the unit was up 3.5% in Q3 on a year-on-year basis, a slower pace than sales because of lower prices for some of the products in the segment. 

On a nine-months basis, revenue rose 23.8% so far 2019 to hit S$12.7 billion ($9.3 billion) while earnings for the January-September period before income and tax hit S$271.8 million ($199 million).

While strengths were seen across the segment, an exit from sugar trading by the company earlier in the year, coupled with worse rice trading conditions, has acted as a break on growth, the company said. 

In its edible oils, problems were encountered in its African operations with Cyclone Idai damaging a refining plant in Mozambique in March, and a palm plantation in Gabon struggled against a backdrop of lower prices.

But a recent surge in palm oil prices should allow the Gabon operation to become more profitable, Muthukumar added.

The company said it would continue to adapt to global trading conditions in light of the US-China trade war. 

“We are looking to diversify to products that are not affected by the trade war. But we have also been able to successfully re-orient our trade flow so far,” chief executive Sunny Verghese said.