, Singapore

Here is Olam's biggest asset to boost its profitability

It is 25-30% of total contribution.

According to Nomura, the edible nuts, spices and beans segment has contributed ~25-30% of Olam’s overall net contribution over the past five years (~15% of Olam’s  revenue and ~29% of Olam’s net contribution in FY12) and thus is a key driver of its profitability.

The segment has seen significant growth in the recent past (three-year revenue/net contribution CAGRs at 29%/36% respectively) driven by acquisitions in this space.

Here's more from Nomura:

Olam’s key acquisitions in this segment include – Key Foods (2007), Universal Blanchers (2007), De Francesco & Sons (2008), IMC (2009), SK Foods (2009), Timbercorp (2009) and Gilroy (2010).

We expect three-year CAGRs of 7%/11% for revenues/net contribution for the segment going forward (without considering any further acquisitions). A key profit driver would be maturing almond yields and new plantations and processing facility in California and Australia, respectively.  

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