Olam Group Limited · SGX:VC2
Olam — Olam International — Shareholder Meeting (May 2020)
26 slides from Olam's shareholder meeting presentation, May 20, 2020
Slide 1: Olam International Limited 25th Annual General Meeting
Olam International Limited Sharpening 25th Annual General Meeting Focus Accelerating sustainable growth Singapore | May 20, 2020
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: Agenda
Agenda • Financial Performance: 2019 and Q1 2020 highlights • COVID-19 Impact & our Response • Re-organisation Plan
Slide 4: 2019 results: At a glance
2019 results At a glance Volume EBITDA PATMI 39.8 M MT S$1,552 M S$564 M +20.9% +25.6% +62.2% Operational Free Cash Flow Gearing PATMI S$498 M +FCFE from S$466 1.32x to M +43.7% S$135 M 1.38x +28.1% Olam International Limited 25th Annual General Meeting, May 20, 2020 4
Slide 5: 2019 results: Highlights
2019 results Highlights Successfully executed Higher Dividend first year of 2019-2024 Strategic Plan Board of Directors recommends final Strong top line and bottom line growth in dividend of 4.5 cents per share Sales Volume, EBITDA & Operational PATMI Including interim dividend, total dividend of Po
Slide 6: 2019 results: Diversified across products and regions
2019 results Diversified across products and regions 2019 Sales Revenue By Segment 2019 Sales Revenue By Region 2019 Sourcing Volume By Region (S$ MILLION) (S$ MILLION) (‘000 METRIC TONNES) Industrial Raw Materials, Edible Nuts Infrastructure and Spices and Confectionery Logistics 12.9% 13.6% 8.4% 1
Slide 7: 2019 results: 5.6% increase in invested capital
2019 results 5.6% increase in invested capital S$ Million +5.6% 16,649 15,832 15,648 14,375 14,812 • Net Fixed Capital increased by S$913 million, with S$577 million increase on account of 8,853 7,705 6,767 6,844 adoption of SFRS(I) 16 and addition of 7,653 right-of-use assets; with the balance on a
Slide 8: Q1 2020 results: At a glance
Q1 2020 results At a glance Volume EBITDA PATMI 8.4 M MT S$391 M S$179.1 M -1.2% -7.0% +6.1% Operational Cash and cash Gearing PATMI equivalents S$136 M S$4.5 B from S$466 1.35x to M -24.9% +S$2.0 B 1.53x +28.1% Olam International Limited 25th Annual General Meeting, May 20, 2020 8
Slide 9: Q1 2020 results: Ample liquidity
Q1 2020 results Ample liquidity Total available liquidity, S$ Million as at March 31, 2020 7,514 20,475 2,231 6,270 4,460 Cash and Short- RMI* Secured Unutilised Available Liquidity term Fixed Deposits Receivables Bank Lines Post Q1 2020, we secured multi-tranche financing facilities aggregating US$
Slide 10: COVID-19 Impact & Our Response
COVID-19 Impact & Our Response
Slide 11: Covid-19: Potential Impacts
Covid-19 : Potential Impacts • Demand side: Potential demand destruction and consequent volume volatility; commodity price volatility and consequent pressure on margins; increased risk of counterparty defaults • Supply side: Potential forced factory closures as a result of containment measures; disr
Slide 12: Covid-19: Demand side impacts
Covid-19: Demand side impacts • Food service demand declining: Steep decline in dine-in & out of home consumption; demand for delivery spiked but not enough to make up for decline in dine-in • Grocery retail demand growing: Packaged foods/grocery retail growing strongly; online groceries growing eve
Slide 13: Covid-19: Our response priorities
Covid-19: Our response 5 priorities 1• Primary focus has been to ensure health and safety of our employees & food safety of our customers 2• Business Continuity Plans activated in all key countries & sites in Africa, Americas and Asia; includes guidelines on how to approach lifting of lockdowns and
Slide 14: Supporting farmers, communities & ecosystems
Supporting farmers, communities & ecosystems Olam has already committed to providing humanitarian aid of US$5 million Provided Medical relief efforts worth over US$600,000 to national health authorities and hospitals; Distribution of food Supporting public-awareness campaigns supplies to rural commu
Slide 15: Outlook
Outlook • With 80-85% of our revenues in the food category where demand is less sensitive to recession or economic downcycles, we believe we will be able to better navigate the demand led uncertainties around COVID-19. • However, the impact of COVID-19 on Q2 2020 and the rest of the year remains ver
Slide 16: Re-organisation Plan
Re-organisation Plan
Slide 17: Re-organisation Plan: Reshaping our business
Re-organisation Plan Reshaping our business Olam announced its new Strategic Plan for the period Olam’s current strong foundation 2019-2024 in January 2019. (built over 30 years) Since then, the Company decided to explore options that would unlock further value over and above our Strategic Plan on a
Slide 18: Strategic Plan 2019-24 goals, pathways and enablers
Strategic Plan 2019-24 4 goals, 4 pathways and 4 enablers Explore investments Strengthen, streamline in new engines for growth and focus our Portfolio 4 1 Improve margins Offer differentiated products/ services in existing and new channels 2 3 OPERATIONAL SUSTAINABILITY DIGITAL LEADERSHIP / EXCELLEN
Slide 19: 2019-2024 Strategic Plan progress
2019-2024 Strategic Plan progress Pathway 1 : Streamline, focus and strengthen portfolio Divesting deprioritised businesses & related assets, US$682m and recycling capital of Invested Capital released in In addition to the FY19 divestments (US$573m): FY19 & Q1 FY20 US$109m released from the sale of
Slide 20: 2019-2024 Strategic Plan Progress: Improve margins
2019-2024 Strategic Plan Progress Pathway 2 : Improve margins through cost & capital productivity a) Cost efficiency ~US$90m of cost reduction & productivity improvement b) Capital productivity US$1.0b less invested capital than Strategic Plan in FY19 US$1.2b less invested capital than Strategic Pla
Slide 21: 2019-2024 Strategic Plan Progress: Value-added offerings
2019-2024 Strategic Plan Progress Pathway 3a : Value-added offerings Risk Management Value-added Innovation : Solutions Services Further pivot to Expanded AtSource+ Ingredients Expanded AtSource+ Embed % at • All certifications (Rainforest • Capability building – Business 16 30 Products Origins 89 1
Slide 22: 2019-2024 Strategic Plan Progress: New customer segments and channels
2019-2024 Strategic Plan Progress Pathway 3b: Expand into new customer segments and channels Private Label / Contract Manufacturing and Food Service Solutions Large private label 11 Large private label customers 13 customers in pipeline ~US$75m Incremental revenues in Q1 FY20 E-Commerce 963 US$67m N
Slide 23: 2019-2024 Strategic Plan Progress: Exploring new engines for growth
2019-2024 Strategic Plan Progress Pathway 4: Exploring 5 new engines for growth (Engine 2) B2C Purpose brands Farmer Services Platform Controlled Environment Agriculture Environmental Footprinting Land tokenisation and & Solutions app carbon trading Criteria for Engine 2 initiatives: • Aligned to ou
Slide 24: Beyond Strategic Plan
Beyond Strategic Plan Re-organising Olam’s business to unlock long term value Olam International (OIL) 1) Stewardship 2) Accelerator • Holding company for OFI & OGA • Exit non-core / de-prioritised businesses & • Parenting advantage (ensure continuity of assets, and redeploy capital for growth the “
Slide 25: Re-organisation Plan: Stage-gated execution
Re-organisation Plan Stage-gated execution Potential IPO STEP 4 Progress with potential capital raise/ IPO listing on a STEP 3 Potential sequential basis in the Carve-out relevant market, if key valuation and related Engage with investors, conditions are met Re-organisation STEP 2 and explore / eval
Slide 26: Olam 25th Annual General Meeting Presentation
Olam 25th Annual General Meeting Presentation olamgroup.com/investors.html ir@olamnet.com