Olam in danger?

I've a friend who bought this stock and i was a little speechless because since he bought it, wouldn't be a good idea to pour hot water on him. But i try to put it in a polite manner, "Well, have you read its financial reports? Do you have good understanding of its business operations?" And he said, "Not really but since it dropped quite a lot since last week, looks like a good buy so i bought it". And the fortunate thing is Temesek Holdings was willing to support their rights issue during that period and he managed to sell it for a decent profit. I was glad for him.

Not that i knew a lot about Olam but looking at the financial report, it kind of make me uneasy. Below is the financial statement for the first half ended 31 December 2012.

Both figures which are highlighted in red indicates the revenue and net profit respectively. In short, Olam has revenue close to about $9.6bn. However, after deducting the expenses, the company earns close to $200m which translates to about only 2% of revenue. This looks crazy to me because the company incur some pretty dangerous operation costs.

Below shows the their borrowings which have grown 15-30% from last year to this year(bad indicator).

Moving on to the financing activities for the company, the only thing i want to highlight here is that there is no indication of them paying off debts, which is one of the most dangerous parts that normal investor will not be able to see. Their debts are increasing, and yet they are having trouble paying them off.

In summary, this company is in trouble but some people are still betting their money on it. Let time decide if this company will survive and make it. I highly doubt this company will ever be profitable in this current state.

Source: http://info.sgx.com/webcoranncatth.nsf/VwAttachments/Att_022449932FC2A5F648257B0B002FE6CA/$file/7Feb2013-H1FY2013_Results.pdf?openelement