Food segment to nourish Olam profits

The agribusiness firm expects its foreign food divisions to drive growth as its commodities divisions flounder.

Here's more from OCBC:

Food outlook still upbeat. Olam’s Food segment saw sales volume rise 20.6% in 9MFY12; net contribution (NC) climbed 30.9%, as NC per ton also increased 8.5% to S$139.

Going forward, Olam remains upbeat about its prospects, particularly upstream dairy farming in Russia and making biscuits and candy in Nigeria – the second largest market in Africa for packaged food consumption.

Industrial Materials more muted. Industrial Raw Materials’ performance was more muted. Sale volume grew 2.1%, but NC fell 34.8% on the back of a 36.2% decline in NC per ton to S$86.

Olam notes that its Cotton and Wood Products BUs continued to face strong headwinds in 9MFY12. It now does not expect to see any rebound in the Cotton business in FY12.

Nevertheless, it is slightly more optimistic about its Wood business, noting that the markets have began to see a slight recovery.

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