Here's why Olam's new growth strategy could finally be bearing fruit

Volumes are recovering across segments.

According to CIMB, despite core profits missing expectations Olam’s strategy review earlier this year could be bearing fruit as volumes begin to recover across most segments.

Here's more:

Steady recovery
Most segments saw an improvement in volumes and revenues for FY13. 

Food staples & packaged foods continued its strong run, with volume up 84% yoy and net contribution growth of 50.8% as the grains business benefited from capacity expansion in Nigeria.

The industrial raw materials segment registered robust volume growth of 17.9% yoy as net contribution grew 47.3%. Growth was driven primarily by volume expansion in cotton.

Glimmer of hope
Olam’s strategy review has begun to see results, and adjusted net gearing is a manageable 0.55x. Free cashflow, though still negative, continues its upward trend, with capex slowing down.

We upgrade the stock to Neutral on the back of stronger segmental performance.