Olam Posts $1.9 Billion First-Half Profit on Saudi Agri Sale

Divestment Strategy Delivers Windfall

Singapore-based commodity trader Olam Group reported net profit of $1.9 billion for the six months ended June 30, a 489% increase from $323.8 million in the same period last year. The surge was driven almost entirely by one-off gains totaling approximately $1.8 billion from asset sales, according to the company's August 14 announcement.

The bulk of the gains came from offloading a 44.58% stake in Olam Agri to a Saudi Arabian fund for $1.8 billion, a transaction that received regulatory clearance from 21 jurisdictions in April. The deal, first announced in February 2025, forms part of Olam's multi-year restructuring plan aimed at unlocking shareholder value. The company also completed the sale of Mindsprint, its IT and digital services division, to Wipro for $483 million, and recognized accounting gains on its retained Olam Agri holdings.

Gautam Wadhwa, CEO of the remaining Olam Group, said the reorganization plan remains on schedule, with three businesses already sold or wound down. The company continues working toward divesting its remaining stake in Arise P&L, he added.

Core Operations Under Pressure

Beneath the divestment windfall, Olam's continuing operations told a different story. Net profit from the remaining Olam Group and its food ingredients arm, ofi, dropped 66% to $55.6 million from $163.7 million year-on-year. Revenue fell 18.3% to $12.5 billion from $15.3 billion, driven by sharp declines in input prices for cocoa and coffee alongside lower trading volumes.

The revenue contraction reflects broader volatility in soft commodity markets, where cocoa prices have swung wildly over the past year amid supply concerns in West Africa, while coffee markets have faced their own weather-related disruptions. Olam attributed the weaker performance to "marked drops" in these input prices, which compressed margins even as the company maintained its market positions.

Earnings per share reached 50.23 cents, up from 8.16 cents a year earlier. However, only 1.04 cents came from continuing operations, with the remaining 49.19 cents stemming from discontinued businesses.

Capital Structure Improves

Olam's balance sheet strengthened significantly during the period. Net gearing fell to 0.93 times from 2.09 times a year earlier, as the company deployed divestment proceeds to reduce debt. Working capital requirements at ofi also declined, contributing to the lower leverage ratio.

The company declared a total dividend of seven cents per share, comprising a one-cent interim dividend and a six-cent special dividend, both payable August 31. This marks a substantial increase from the two-cent dividend paid in the prior year, reflecting management's confidence in its restructuring trajectory despite operational headwinds.

Geopolitical Risks Loom

Looking ahead, Olam cautioned that its constituent businesses face an uncertain external environment. The company specifically flagged potential escalation of conflict in the Middle East as a risk that could negatively impact performance. Given Olam's significant exposure to agricultural supply chains running through the Red Sea and broader Middle East trade routes, any disruption to shipping lanes or regional stability would likely affect logistics costs and delivery schedules.

The company expects its remaining businesses to deliver "resilient operational performance" in 2026 but is monitoring global conditions closely. This measured outlook reflects the reality that while Olam has successfully executed its divestment strategy, the underlying commodity trading business remains exposed to volatile input prices, weather patterns, and geopolitical shocks beyond management control.

Market Reaction and Strategic Outlook

Shares of Olam Group fell 6.9% to $1.21 in early trading following the results announcement, suggesting investors remain focused on the weaker core earnings rather than the one-off gains. The stock decline indicates market concerns that the divestment-driven profit surge may mask ongoing challenges in Olam's day-to-day operations, particularly as commodity price volatility persists.

With three divestments now complete and the Arise P&L stake sale in progress, Olam's restructuring is entering its final phases. The question for investors is whether the slimmed-down entity can stabilize margins and volumes in its remaining cocoa, coffee, and food ingredients businesses, or whether further portfolio pruning lies ahead. For now, the company's improved capital structure provides breathing room, but sustained profitability will depend on navigating the twin challenges of commodity price swings and geopolitical uncertainty across its Asian and Middle Eastern markets.