Re-organisation of Olam : Unlocking long-term value 20 January 2020 | Singapore
Cautionary Note on forward looking statements This presentation may contain statements regarding the business of Olam International Limited and its subsidiaries (‘Group’) that are of a forward-looking nature and are therefore based on management’s assumptions about future developments. Such forward looking statements are intended to be identified by words such as ‘believe’, ‘estimate’, ‘intend’, ‘may’, ‘will’, ‘expect’, and ‘project’, and similar expressions as they relate to the Group. Forward-looking statements involve certain risks and uncertainties because they relate to future events. Actual results may vary materially from those targeted, expected or projected due to several factors. Potential risks and uncertainties includes such factors as general economic and market conditions, foreign exchange fluctuations, interest rate changes, commodity price fluctuations and regulatory developments. Such factors that may affect Olam’s future financial results are detailed in our listing prospectus, offering circulars, listed in this presentation, and/or discussed in today’s news release. The reader and/or listener is cautioned to not unduly rely on these forward-looking statements. We do not undertake any duty to publish any update or revision of any forward-looking statements. 2
We are successfully implementing our Strategic Plan 2019-2024 and have met the key strategic deliverables of the first year Our strategy was informed by We developed 4 key strategic pathways & 4 key trends identified 4 enablers to execute this Plan 01 02 03 04 Right-for-me 4 PATHWAYS Streamline, Improve Offer Explore Focus & margins differentiated investments Right-for-planet Strengthen our products/services in new portfolio in existing & engines for Right-for-producers new channels growth 4 ENABLERS Operational Sustainability Digital Leadership How I live & consume Excellence & Talent How it’s produced 3
Strategic Plan FY19-24 Progress: Pathway 1 & 2 01 02 Streamline, Focus & Strengthen our portfolio Improve margins through… Divesting deprioritised a) Cost efficiency ~US$700m businesses & related assets, ~US$70m and recycling capital of Invested Capital released (vs. US$1.6b targeted over of cost reduction & productivity Examples : Sales of permanent water the FY19-24 period) rights (Australia), Sales of US onion & improvement garlic real estate assets, Exit of Argentina Peanuts business, Closure of trading desks of Sugar / Rubber / Fertiliser b) Capital productivity ~US$560m Investing further in US$900m+ prioritised businesses FCFE as of Q3 FY19 of investments (organic & inorganic) 65 days 1.37x Example of investments : (vs. US$3.5b targeted over the FY19- Dangote Flour Mills (Nigeria), 24 period) BT Cocoa (Indonesia), Hughson Cycle Time (vs. 76 Gearing as Nut Inc (USA), Cotonchad days in FY18) of Q3 FY19 4
Strategic Plan FY19-24 Progress: Pathway 3a 3a Value-added offerings Innovation : Risk Management Value-added Further pivot to Solutions Services Ingredients Expanded AtSource+ Expanded AtSource+ 46 • Launched multiple value- Embed % at • All certifications (Rainforest 13 Products 30 16% added ingredients & provided Alliance, Utz) & customised unique solutions leveraging grades new Origins our 14 innovation centres clients up from 10% • Extensive organic range to (e.g. “True Dark” cocoa acquired in FY18 meet rising demands powder, nut paste, soluble 125 customers 200k+ across portfolio : Coffee, coffee, private label) Almond, Hazelnut, Sesame, Tahini products, Dried Onion farmers • Building capabilities for our & Garlic, Chili, Turmeric, new strategic initiatives Cumin, Cinnamon, Black pepper 5
Strategic Plan FY19-24 Progress: Pathway 3b & 4 3b 04 Pursue growth by serving 3 new engines for growth new customer segments & channels being explored (Engine 2) Private Label / Contract Manufacturing & Food Service Solutions 8-10 5 New large private Large private label customers label customers in pipeline ~US$75m Incremental revenues B2C Farmer Controlled Environment Initiative Services E-Commerce Agriculture Platform 460+ ~US$30m New customers of Revenue 6
Over & above the Strategic Plan… Olam announced its new Strategic Plan for the period FY19-24 in January 2019 Re-Organisation Plan The Company decided to explore options that would unlock further value over and above our Strategic Plan on a sustained basis by re-organising our portfolio Strategic Plan FY19-24 In May 2019, the Company appointed two independent Financial Advisors (FAs) – Credit Suisse & Rothschilds to conduct this exercise Olam’s current Building in part on the FAs recommendation, Olam has decided strong foundation to re-organise its portfolio of businesses to create two new coherent operating groups 77
Bold plan to re-organise the current businesses into two distinct operating groups Olam International (OIL) 1) Stewardship 2) Accelerator • Hold OFI & OGA • Nurture gestating businesses to full potential (Packaged Foods Business, Infrastructure & • Parenting advantage (ensure continuity of Logistics, Olam Palm Gabon) the “Olam Way”, execute cross-cutting initiatives across the Olam Group) • Incubate new engines for future growth • Provide shared service to OFI & OGA to • Exit non-core / de-prioritised businesses & optimise synergies assets, and redeploy capital for growth Olam Food Ingredients (OFI) Olam Global Agri (OGA) • Industry-leading businesses • Differentiated global agri- offering sustainable, natural, business with unique focus on value-added food ingredients high-growth emerging markets which are “on-trend” • Comprises Grains & Animal • Comprises Cocoa, Coffee, Feed, Edible Oils, Rice, Cotton, Edible Nuts, Spices & Dairy Commodity Financial Services 8
Re-organisation to unlock long-term value Simplify • Re-organise the current diverse business portfolio into two new coherent operating groups in line with key consumer trends and our market opportunities portfolio • OIL to warehouse & manage the responsible divestment of non-core assets and businesses identified in the Strategic Plan Sharpen • Increased focus will enhance performance in each of the operating groups focus • Better attract & retain best-in-class leadership and management teams for each operating group Attract • Target investors who are aligned with the vision of each operating group to better value these businesses additional investors Accelerate • Raise new growth capital via potential carve-out / IPO of OFI and OGA profitable growth • Deploy new growth capital to accelerate growth over and above the Strategic Plan • OIL to incubate new engines for growth 9
Olam Food Ingredients 10
Olam Food Ingredients Meeting the needs of a changing consumer landscape It’s what consumers want… It’s where we are increasing our capabilities Innovation centres & co- Natural colours and • Health & nutrition Olam Food Ingredients creation with customers flavours – spices blends, • Premiumisation on ingredient, blends, no-added sugar purees • Natural ingredients recipes, and solutions • Indulgence • Ethnic tastes No sodium innovations for High-end, single origin • Growth in private clean labelling (e.g. cocoa, ingredients (cocoa, label garlic and onion powders, coffee) • Food service – high heat chilies ) increasing out-of- home consumption Full range of edible nuts Wide range of specialty • Environmentally & and formulations for coffee products and socially responsible healthy snacking and dairy ingredients • Supply chain ingredients traceability & provenance Growing presence in AtSource provides • Assurance / private label, food traceability and enhanced Certification services, and e-commerce levels of impact 11
Olam Food Ingredients A global leader offering sustainable, natural, value-added food ingredients, so consumers can enjoy the healthy and indulgent products they love A complementary Imaginative Global value chain & differentiated experts tailoring presence from our “on-trend” solutions in own farms / farm- partnership with gate origination for portfolio anticipating & our customers transparent & meeting sustainable consumer food sourcing, to choices adaptive manufacturing solutions 12
Olam Food Ingredients Transforming ourselves to strengthen cross-cutting capabilities Shared customers Centralised Product Development & Innovation New approach to cross-business key account management for food Building integrated centres of excellence manufacturers, retailers, food service, and for product development, applications and e-commerce customers solutions Farmers / farm-gate presence Private label / Co-manufacturing Upstream operations in selective crops. Manufacturing downstream / packaged food Boots-on-the-ground at farm gate all year for retailers, brand owners and food service round Unified digital channels Sustainability 1st mile: Digitising multiple supply chains Clear sector leadership in sustainability on common Apps exemplified by AtSource, the most comprehensive B2B sustainable Last mile: Combining cross-business sourcing platform e-commerce initiatives, deliver fulfilment & capability and digital marketing 13
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