Olam in talks to sell assets after profit slide

SINGAPORE — Olam International is in talks to sell more assets and will shift focus to beefing up profit margins over sales volumes in a drive to free up cash, said the Singapore-based food commodities trader.

The company, controlled by state investment arm Temasek Holdings, missed its target to generate more cash than it spent in the fiscal year ended June 30, chief executive officer Sunny Verghese said yesterday.

Olam is in talks to sell stakes in assets, including a fertiliser project in Gabon, he added.

Mr Verghese said at a briefing in Singapore: “We are not focused on growing volumes anymore, but rather on growing our profit pool.”

Olam’s net income plunged 44 per cent to S$31.8 million last quarter while revenue slipped 11.4 per cent to S$5.76 billion. Its earnings were disappointing and the shift in strategy to profit margin over volume has yet to yield results, said Mr Ephrem Ravi, an analyst with Barclays.

One of the world’s top three coffee and rice traders, Olam is seeking investors, such as Mitsubishi Corp, as a rise in global food demand adds to the attraction of agriculture.

Mitsubishi has said in June that it will buy a controlling stake in Olam’s Australian grain unit. BLOOMBERG