Who lost S$2.8m in Olam’s commodity financial business?
It recorded a quarterly loss of S$2.8m versus 1QFY11’s S$4.4m profit.
According to DMG, the market was concerned with Olam’s industrial raw materials business after the recent loss announcement by Noble. We note that Olam’s industrial raw materials business recorded volume growth of 8.7% YoY, but GC and NC fell 7.7% and 17.4% YoY respectively. Industrial raw materials NC per ton fell 24% YoY, with cotton operations affected by volatility in cotton prices. However, the impact was partially mitigated by fee income from ginning operations particularly in Australia, which had a much larger crop to gin this season. Olam believes the cotton price volatility has stabilised in the new cropping season.
The commodity financial services (CFS) business recorded a quarterly loss of S$2.8m versus 1QFY11’s S$4.4m profit due to exceptional volatility in commodity prices.
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Tags: Olam, Olam commodity financial services
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