Slide 1: Olam invests in greenfield Rubber plantations in Gabon
Olam invests in greenfield Rubber plantations in Gabon Analyst / Media presentation 19 March 2012 Building Relevant Scale : Delivering the Olam Strategy 1
Slide 2: Cautionary note on forward-looking statements
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
Slide 3: Investing in upstream rubber plantations is aligned with our strategic plan
Investing in upstream rubber plantations is aligned with our strategic plan Our governing objective is to maximise long term intrinsic value for our continuing shareholders Pursue 3 key drivers: 1) Open up Capital Spreads (ROE-KE, ROIC-WACC); 2) Increase the Rate of Profitable Growth; and 3) Sustain
Slide 4: Highlights of the Gabon rubber investment
Highlights of the Gabon rubber investment • 80/20 Joint venture between Olam and Republic of Gabon for setting up rubber plantations; 28,000 hectares to be developed in Phase 1. Investment Additional 22,000 hectares planned in Phase 2 overview • Planting to start in FY2013 with targeted completion b
Slide 5: Industry Overview: Natural & Synthetic Rubbers
Industry Overview: Natural & Synthetic Rubbers Natural Rubber (NR) Synthetic Rubber (SR) Industry Size $41 billion $51 billion Volumes 10.9 million tons 14.9 million tons Historical Growth 4.1% 3.6% Forecasted Growth 3.3% 2.9% Share 39% in ‘00, 42% in ‘10, 43% in ‘20 61% in ‘00, 58% in ‘10, 57% in ‘
Slide 6: Industry Overview: Natural (NR) & Synthetic (SR) Rubber Price trends
Industry Overview: Natural (NR) & Synthetic (SR) Rubber Price trends Prices peaked when floods in SE Asia affected supply, bringing 7,000 stocks-to-use down to 10% 6,000 Correlation largely broken down in 5,000 2010-11 due to supply shocks in NR On an average, NR is more expensive than SR 4,000 3,00
Slide 7: Industry Overview: Synthetic Rubber – Supply, Demand and Price Outlook
Industry Overview: Synthetic Rubber – Supply, Demand and Price Outlook Historical (MMT) 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 CAGR Oil Production* 77 80 83 85 85 85 86 84 87 89 1.62% SR Production 10.9 11.4 12.0 12.1 12.7 13.4 12.8 12.4 14.1 15.1 3.70% SR Consumption 10.9 11.4 11.9 11.9
Slide 8: Industry Overview: Natural Rubber – Supply, Demand and Price Outlook
Industry Overview: Natural Rubber – Supply, Demand and Price Outlook Historical (MMT) 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 CAGR Area (M ha) 8.6 8.7 8.8 9 9.3 9.7 10.1 10.3 10.6 10.8 2.56% Average Yield 1.18 1.25 1.28 1.28 1.36 1.38 1.33 1.3 1.38 1.40 1.92% NR Production 7.4 8.0 8.7 8.9
Slide 9: Industry Overview: Demand Drivers
Industry Overview: Demand Drivers Natural Rubber (NR) demand linked to GDP growth, driven by China & India (43% of total demand) The Auto industry accounts for ~70% of the NR demand HCV tyres which require high proportion of NR (75%) are posting strong growth led by infrastructure development in eme
Slide 10: Industry Overview: Supply Drivers
Industry Overview: Supply Drivers Supply response is slow due to long gestation. Increased tapping frequency & fertilizer application can enhance short term supply but at the cost of future yields Weather disruptions like heavy rain that impede tapping affect short-term supply, while drought can per
Slide 11: Olam’s Rubber Strategy
Olam’s Rubber Strategy 1 Greenfield Plantation JV of 28,000 ha in Gabon Planting: 2013 First yield: 2020 To become a leading integrated 2 4 Rubber supply chain player with Brownfield SIFCA operations in Semi-mature JV in Palm & plantation in Rubber assets in upstream, Laos/Cambodia/Indo Africa origi
Slide 12: Highlights of Olam’s Rubber Strategy elements
Highlights of Olam’s Rubber Strategy elements • Rubber is amongst the leading internationally traded commodities suited to corporate farming • Upstream accounts for a disproportionately higher share of the rubber 1. Greenfield value chain profits Plantations • 28,000 Ha to be developed in Phase 1 in
Slide 13: Highlights of Olam’s Rubber Strategy elements
Highlights of Olam’s Rubber Strategy elements • Highly fragmented supplier base (small holders account for ~85% of Asian production) provides an opportunity for Olam to participate as a supply chain manager 3. Supply Chain • Business model aligned with Olam’s core supply chain skills and Rubber • Ab
Slide 14: Attractiveness of Rubber Plantations
Attractiveness of Rubber Plantations Scalability: Rubber plantations are suited to large scale corporate farming practices and provide significant economies of scale Large & growing industry: Rubber consumption is growing by ~1 million tons/annum. Natural Rubber accounts for ~45% Lower agronomy risk
Slide 15: Why Gabon?
Why Gabon? Large landbanks – Gabon provides the option to secure a large contiguous landbanks in an ideal agronomic zone suited to rubber plantations Local Community impact – The project will generate sizeable employment in the region and provide housing and infrastructure development Active Governm
Slide 16: Thank You
Thank You Building Relevant Scale : Delivering the Olam Strategy 16