Singapore-based commodity producer and supplier Olam International posted a net loss of S$64.3M (US$45.7M) for the year ending December 2015, down from a net profit of S$591M (US$428M) for the same period a year earlier, according to a Nikkei Asian Review report on 29 February.
The US$1.2bn purchase of Archer Daniel Midland's global cocoa business, completed in October 2015, and stock valuation losses weighed on the bottom line.
The report said Olam's revenue for 2015 fell 3.6% to S$19.05bn (US$13.79bn) due to the closure of lower-margin businesses.
The commodities sector has been grappling with falling prices of palm oil and other products. For the current year, Olam expects palm oil prices to move higher due to lower crop yields in Indonesia and Malaysia.
Olam CEO Sunny Verghese said the company expected palm oil prices to trend higher due to the El Niño weather phenomenon affecting output and additional demand stemming from the
Indonesian government's mandate to use palm oil as a biofuel.
While El Niño would dampen rice and cocoa production, it was likely to boost almond production in California by bringing more rainfall to the region.
Verghese said Olam’s cocoa business delivered a stronger performance thanks to the added processing capacity from the ADM acquisition, while the food staples and packaged food business struggled as the contribution from sugar and palm trading decreased.
The current downtrend in the commodities sector "offers a lot of opportunities" for acquisitions.
With the financial backing of stakeholders, Singaporean state investor Temasek Holdings and Japanese trading house Mitsubishi Corp, Olam would focus on making fewer but bigger acquisitions, Verghese said.