Olam Group Limited · SGX:VC2
Olam — Olam International — Merger or Acquisition (January 2012)
27 slides from Olam's merger presentation, Jan 30, 2012
Slide 1: Olam-RUSMOLCO Partnership for Dairy and Grains Farming in Russia
Olam-RUSMOLCO Partnership for Dairy and Grains Farming in Russia Analyst Conference Call 30 January 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 (‘Olam’) and its subsidiaries (‘Group’) and RUSMOLCO Group and its subsidiaries (‘RC’) that are of a forward looking nature and are therefore based on managemen
Slide 3: Presentation outline
Presentation outline Partnership and Investment Overview About RUSMOLCO Partnership Advantages Investment Rationale RUSMOLCO Expansion Financial Impact Q&A Building Relevant Scale : Delivering the Olam Strategy 3
Slide 4: Presentation outline
Presentation outline Partnership and Investment Overview About RUSMOLCO Partnership Advantages Investment Rationale RUSMOLCO Expansion Financial Impact Q&A Building Relevant Scale : Delivering the Olam Strategy 4
Slide 5: Partnership and investment overview
Partnership and investment overview The Olam to invest up to US$75m for 75% stake in RUSMOLCO through a combination of capital injection and purchase of shares from owners Partnership (Founder/Chairman and CEO) who will retain 25% stake Investment is supported by large and growing local demand for d
Slide 6: About RUSMOLCO
About RUSMOLCO Founded in 2007, RUSMOLCO is the largest raw milk producer in the Penza region with 7 dairy farms (7,200 heads of cattle including 3,600 milking cows) and land bank of 133,000 ha (106,000 are arable and 52,000 is currently cultivated for grains farming) RUSMOLCO was founded by promote
Slide 7: About RUSMOLCO - Overview
About RUSMOLCO - Overview Building Relevant Scale : Delivering the Olam Strategy 7
Slide 8: About RUSMOLCO – Farms / Land bank
About RUSMOLCO – Farms / Land bank Building Relevant Scale : Delivering the Olam Strategy 8
Slide 9: About RUSMOLCO – Dairy specifications
About RUSMOLCO – Dairy specifications Building Relevant Scale : Delivering the Olam Strategy 9
Slide 10: About RUSMOLCO - Overview
About RUSMOLCO - Overview Building Relevant Scale : Delivering the Olam Strategy 10
Slide 11: Partnership advantages
Partnership advantages The Olam Advantage The RUSMOLCO Advantage Global supply chain network with competitive advantages in origination, distribution, marketing, and value- Ownership of large, secure land bank added processing and services providing a strong platform for growth and for future expans
Slide 12: RUSMOLCO - Board & management
RUSMOLCO - Board & management RUSMOLCO Board to comprise of 7 Directors OLAM to appoint 5 Directors RUSMOLCO founder, Mr. Naum Babaev to continue as the Chairman of the Board Mr. Andrey Danilenko, Chairman of the National Dairy Producers Union in Russia appointed as Independent Director Building Rel
Slide 13: Presentation outline
Presentation outline Partnership and Investment Overview About RUSMOLCO Partnership Advantages Investment Rationale RUSMOLCO Expansion Financial Impact Q&A Building Relevant Scale : Delivering the Olam Strategy 13
Slide 14: Strategy overview : Dairy
Strategy overview : Dairy Olam’s Dairy Strategy Build global leadership by participating selectively in upstream dairy farming assets in low cost origins and midstream dairy processing assets which will strengthen our market position in the global dairy industry and significantly raise our margin pr
Slide 15: Why Russia for dairy farming?
Why Russia for dairy farming? Russia is one of the most attractive markets for upstream dairy farming Large and growing demand for dairy and dairy-based products Large demand/supply gap support high milk prices Russian government import tariff structure designed to encourage local dairy investments
Slide 16: Russia among the most attractive major markets for upstream dairy
Russia among the most attractive major markets for developing upstream dairy business Scope for large-scale investments in modern Large, growing demand for dairy dairy technology Demand growth 14% 11% 10% Share of co-ops <1% ~40% <1% Supply growth 14% 11% 9% Building Relevant Scale : Delivering the
Slide 17: Significant production efficiencies from modern dairy farming practices
Significant production efficiencies and economics from modern dairy farming practices Milk selling price Yields per cow +200-250% +30-40% Note: 2006-2008 average data; *result of Russian agricultural census 2006 Source: Rosstat, Union of dairy enterprises Building Relevant Scale : Delivering the Ola
Slide 18: Strategy overview : Grains
Strategy overview : Grains Olam’s Wheat Strategy Build regional leadership by investing in a configuration of port-based milling assets in import dependent countries with growing wheat flour consumption Focus on Sub-Saharan Africa where per capita consumption of wheat flour is low but growing (4-5%
Slide 19: Why Russia for grains farming?
Why Russia for grains farming? Grains farming in Russia an attractive proposition due to: Strong domestic and export demand Significant comparative advantages in primary production Arable land available at significantly lower cost compared to the US, Western Europe and Australia where average yield
Slide 20: High Russian crop yields, relative to land price
High Russian crop yields, relative to land price vis- à-vis Western Europe / US Exponentially higher land prices Fractionally higher yields 37.8x 2.6x 27.1x 1.6x 1.5x 1.6x 1.4x 1.3x 0.9x 10.2x 4.6x 3.8x 2.8x 1.7x Source: FAPRI; InvestAg Savills 2011; Elbrus Capital 2011 Building Relevant Scale : Del
Slide 21: Strategic partnership fit
Strategic partnership fit Brownfield vs. Greenfield Contiguous land parcels are less accessible; aggregation is a complex and arduous task Greenfield investment will take us 3-4 years to reach RUSMOLCO’s current state of development Brownfield offers base infrastructure which can be expanded to incl
Slide 22: Presentation outline
Presentation outline Partnership and Investment Overview About RUSMOLCO Partnership Advantages Investment Rationale RUSMOLCO Expansion Financial Impact Q&A Building Relevant Scale : Delivering the Olam Strategy 22
Slide 23: RUSMOLCO expansion – Phase 1
RUSMOLCO expansion – Phase 1 Construction of 4 new confinement-based dairy farms, bringing the total milking cow population from the current 3,600 to 20,000 heads by 2017 Expansion of area under cultivation from the current 52,000 to 106,000 ha by 2017: mix of winter (wheat) and summer crops (soy, c
Slide 24: RUSMOLCO expansion – Phase 2
RUSMOLCO expansion – Phase 2 Plans to further double the size of operation over the subsequent 3 to 4 years Expansion of area under grains cultivation from 106,000 ha to 130,000 ha Target to increase the milking cow population from 20,000 heads to 50,000 heads of cattle At steady state, RUSMOLCO wil
Slide 25: Presentation outline
Presentation outline Partnership and Investment Overview About RUSMOLCO Partnership Advantages Investment Rationale RUSMOLCO Expansion Financial Impact Q&A Building Relevant Scale : Delivering the Olam Strategy 25
Slide 26: Financial impact
Financial impact Olam’s investment of up to US$75Mn to be funded from internal accruals and borrowings Phase 1 incremental CAPEX investment of up to US$320Mn to be self-funded by internal cashflows generated by RUSMOLCO and supported by the Russian government capital incentive programme – No additio
Slide 27: Thank You!
Q&A Thank You! Building Relevant Scale : Delivering the Olam Strategy 27
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