Olam attributed the results to exceptional gains recorded during the period arising from the successful execution of various initiatives in the strategic plan. Operational PATMI declined by 6.7% on higher depreciation and amortization charges. These numbers include a net loss of S$3.7 million for 2014 on the fair valuation of biological assets compared to a net gain of S$92.5 million in 2013.
For the three months ended June 30, PATMI was down 43.9% to S$31.8 million due to exceptional losses of S$16.7 million recorded in the quarter compared to exceptional gains of S$9 million in the fourth quarter of 2013. Excluding exceptional items, operational PATMI for the quarter increased 1.5% to S$48.5 million. These results include an overall reduction in the net gain from the fair valuation of biological assets by S$25.5 million, from S$42.6 million in the fourth quarter of 2013 to S$17.1 million in the fourth quarter this year.
Food Staples & Packaged Foods volumes and revenues declined by 5.3% and 5.9% respectively due to lower grains and rice volumes and prices. Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) declined by 18.2% due to lower contribution from grains and rice, impact of the devaluation of the Ghanaian Cedi on packaged foods, grains and rice, lower contribution from SIFCA in palm and continued underperformance in the upstream dairy operations in Uruguay and Russia.
“We are pleased with the progress made in this first full year of our revised strategic plan,” said Olam’s Group Managing Director and Chief Executive Officer Sunny Verghese. “Disciplined execution on various strategic initiatives has helped to release cash and unlock intrinsic value across projects and platforms that we have built over the years.
“We will stay focused on our twin objectives of pursuing profitable growth and accelerating free cash flow generation, while investing in selective growth opportunities that can enhance shareholder value over time. In this context, Temasek’s recent investment to become the new majority shareholder in Olam will provide a strong base for a more resilient future for the company.”
Since the strategic plan released in April 2013, Olam announced 17 initiatives, of which three were completed in 2013 and 11 in 2014. These 14 completed initiatives had released cash of S$603.9 million, generated a P&L gain of S$94 million and added S$16.5 million directly to capital reserves.
Three remaining initiatives, including the recently announced sale of 25% equity interest in the Packaged Foods business unit to Sanyo Foods, are expected to be completed within 2015. These are likely to release further cash of approximately S$313.1 million, generate a P&L gain of approximately S$22.4 million and add approximately S$118.8 million directly to capital reserves.