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Olam International

Satisfactory Essays

SINGAPORE
MITA No. 013/06/2008

Company Report

12 March 2009

Olam International Ltd
Gravity-defying growth
Resilient to recession. Olam International Ltd (Olam) has been delivering consistent revenue and earnings growth since its listing in 2005, and growth momentum is expected to sustain despite the global recession. Management has guided for 16% to 20% topline CAGR and 25% to 30% earnings CAGR over the next three years. These goals are achievable, given that demand for food is relatively inelastic and earnings are therefore less vulnerable to the global economic downturn. Olam has already proven its resilience by delivering a 32.9% growth in 1H09 core earnings despite the recent collapse of commodity prices, demonstrating its …show more content…

Listed on the SGX Mainboard, Olam is a component of the Straits Times Index and MSCI Singapore. Strong track record. Olam International Ltd (Olam) has delivered consistent revenue and earnings growth since its listing in 2005. Revenue has grown at a compound annual growth rate (CAGR) of 34.0% while earnings have similarly risen by 36.5%. Despite the recent collapse of commodity prices, Olam continued to deliver a 32.9% growth in 1H09 core earnings on the back of a 20.2% growth in volume, demonstrating its ability to perform under difficult conditions.
Exhibit 1: Revenue, FY05 - FY08

9,000 8,000 7,000 6,000 S$ m 5,000 4,000 3,000 2,000 1,000 0 FY05 FY06 FY07 3,369 4,361 CAGR: 34.0 % 5,456

8,112

FY08

Source: Company

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12 March 2009

Olam International Ltd

Exhibit 2: Net profit, FY05 - FY08

180.0 160.0 140.0 120.0 S$ m 100.0 80.0 60.0 40.0 20.0 0.0 FY05 FY06 FY07 65.9 87.2 109.0 CAGR: 36.5%

167.7

FY08

Source: Company

Resilient to economic contraction. Despite the global economic recession, Olam remains confident of sustaining its earnings growth momentum. Management guides for 16% to 20% topline CAGR and 25% to 30% earnings CAGR over the next three years. These goals are achievable, given that demand for food is relatively inelastic and less susceptible to the global economic turmoil. Agricultural products are less prone to cyclical volatility of commodities as compared to metals and energy, as illustrated in

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