Olam Group Limited · SGX:VC2
Olam — Olam International — FY2010 Earnings Presentation
82 slides from Olam's earnings presentation, Aug 26, 2010
Slide 1: FY 2010 Full Year Results Briefing
Olam International Limited FY 2010 Full F ll Yea Y r Results R lt Briefing B i fi 26th August 2010 | Singapore 1
Slide 2: Notice
Notice This presentation should d be read in conjunction with Olam International Limited’s Fourth Quarter,, FY2010 (Q Q (Q4 FY2010) F ) and Full Year FY2010 Financial Resultts for the period ended 30th June J 2010 stateme t t entt lodged l d d on SGXNET on 26th August 2010. 2
Slide 3: Cautionary note on forward-looking statements
Cautionary note on forw ward-looking statements This presentation may contain statements reegarding the business of Olam International Li i d and Limited d its i subsidiaries b idi i (‘Group’) (‘G ’) that h arre off a forward f d looking l ki nature and d are therefore based on management’s assumpti
Slide 4: FY2010 Full Year Results Briefing: Agenda
FY2010 Full Year Results Briefing: Agenda FY2010 Full Year Res sults: Consolidated P&L Analysis A Segmental Analysis s Balance Sheet Anallysis y Delivering our Strate egy 4
Slide 5: Consolidated P&L Analysis
FY2010 Full Year Results s: Consolidated P&L Ana alysis 5
Slide 6: FY2010 Full Year Results: Summary
FY2010 Full Year Results s: Summary (in S$ million) Y2010 FY FY2009 % Increase Sales Volume (MT) 7,006,478 5,720,640 22.5 Sales Value 10,455.0 8,587.9 21.7 Net Contribution (NC) 9 901.0 607.2 48.4 NC/ton 129 106 21.1 Profit Before Tax (PBT) 4 420.2 258.0 62.9 Profit After Tax (PAT) 3 7 359 359.7 252
Slide 7: Sales Volume: 7.006 million metric tons
FY2010 Full Year Results s: Sales Volume Sales Volume: 7.006 million metric tons Volume g grew by y 1.28 86 million metric tons 22.5% 5% growth g o over o e FY2009 F 009 Volume growth acros ss all 4 segments 7
Slide 8: Sales Volume by segment
FY2010 Full Year Results s: Sales Volume FY2010 FY2009 % (MT/’000) (MT/’000) Change Edible Nuts, Spices & Beans 1,108 976 13.5 Confectionery & Beverages Ingredients 1 288 1,288 1 170 1,170 10 1 10.1 Food Staples & Packaged Foods 3,207 2,451 30.8 Total Food Category 5,603 4,597 21.9 Industrial Raw Ma
Slide 9: Sales Volume Growth: Segmental Contribution
Sales Volume Growth: Segmental Contribution Sales Volume (1 000 Mts) (1,000 Sales Volume growth 22.5%, 7.006 mts 8000 279 7000 118 756 132 22% 6000 9% 59% 5000 10% 7006 4000 5721 3000 2000 1000 0 FY2009 Edible Nuts, Confectionerry & Food Staples & Industrial Raw FY2010 Spices & Beans Beverage Packag
Slide 10: Net Contribution: S$901.0 million
FY2010 Full Year Results s: Net Contribution Net Contribution (N NC): S$901.0 million 48.4% growth over FY Y2009 NC growth across all se egments NC per ton increased ffrom $106/ton in FY2009 to S$129/ton in FY2010 10
Slide 11: Net Contribution Growth: Segmental Share
Net Contribution Growtth: Segmental Share Net Contribution (S$ M) NC growth 48.4%, S$901 million 1000 25 900 67 800 92 8% 901 54 56 23% 700 19% 31% 600 19% 500 400 607 300 200 100 0 FY2009 Edible Nuts, Confectionery & Fo ood Staples & Industrial Raw Commodity FY2010 Spices & Beans Beverage Packaged
Slide 12: Net Contribution Growth: Segmental Share
Net Contribution Grow wth: Segmental Share Net Contrribution Net Contribution / MT FY2010 FY2 2009 % FY2010 FY2009 % S$million S$m million change S$ S$ change Edible Nuts, Spices & Beans 210.9 15 55.1 35.9 190 159 19.5 Confectionery & Beverages 222.8 16 68.5 32.3 173 144 20.1 I Ingredients di t Food
Slide 13: Net Contribution Growth: Sources
Net Contribution Growtth: Sources Net Contribution NC growth 48.4%, S$901 million (S$ M) 1000 177 900 800 117 901 700 60% 600 40% 607 500 400 300 200 100 0 FY2009 Volume Growth Margin M Growth FY2010 13
Slide 14: Impact of FRS 102
Impact of FRS 102 The following two emp ployee Share Schemes come under the ambit of FRS 102: • Employee Share Subscrription Scheme (ESSS) • Employee Share Options Scheme (ESOS) The impact of FRS 102 2 on the Financial Statements is as follow ws: 14
Slide 15: Overhead Expenses
FY2010 Full Year Results s: Overhead Expenses Overheads Expens ses increased by 37.4% to S$522.0 $ m million in FY2010 15
Slide 16: Key Metrics
FY2010 Full Year Results s: Key Metrics Net Profit After Tax including exceptionals: p S$359.7 $ m • 42.7% growth over FY2009 9 Net Profit After Tax excludin ng exceptionals: S$272.1 m • 49.3% growth over FY2009 9 Earnings per Share (EPS) • 17.92 cents/share FY2010 0 vs 14.71 cents/share FY2009 ((ba
Slide 17: Key Return Metrics
FY2010 Full Year Results s: Key Return Metrics ROE (BOPE) • 29.3% in FY2010 vs s 26.1% in FY2009 • Equity Spread (ROE E-KE) 19.3% ROE (Average) • 22.2% in FY2010 vs s 23.0% in FY2009 ROIC (Average) • 14.0% 14 0% in FY2010 vss 14.7% 14 7% in FY2009 • Total Capital Sprea ad (ROIC-WACC) 6.8% 17
Slide 18: Segmental Analysis
FY2010 Full Year Results s: Segmental Analysis 18
Slide 19: Segmental Analysis FY2010: Summary
Segmental Analysis FY2010: Summary 19
Slide 20: Well Diversified Sourcing: Origins
Well Diversified Sourcing g: Origins Africa America Africa America Europe p Europe Asia & Middle East Asia & Middle East Sourcing Volume Sourcing Volume FY2010 FY2009 20
Slide 21: Well Diversified Sales: Markets
Well Diversified Sales: Markets M America Africa America Africa Europe Europe Asia & Middle East Asia & Middle East Sales Turnover Sales Turnover 0 0 FY2010 FY2009 21
Slide 22: Balance Sheet Analysis
FY2010 Full Year Results: Balance Sheet Analysis 22
Slide 23: Balance Sheet Analysis: Summary
Balance Sheet Analysis: Summary Prudent capital management In S$M, as of June 2010 6,275 6,275 Cash 672 Short-term 2 282 2,282 debt Core 68% working g 3,607 capital Long-term 2,221 debt Others 4 (247) 247 Fair value reserve Fixed term 1,976 1,992 32% 2,019 2,083 Equity & reserves assets Use of capit
Slide 24: Sound working capital metrics
Sound working capital metrics Stock (days) and Debtor (days) and trade creditor (days) advance to suppliers (days) FY09 FY10 FY09 FY10 34 31 31 92 101 26 13 10 Stocks (days) Advance to suppliers D bt (d Debtor (days)) T d creditor Trade dit (d(days)) Cash-to-cash cycle (days) Successful working capi
Slide 25: Balance Sheet Analysis: Inventories
Balance Sheet Analysis: Inventories 86.4% of inventories sold forward f or hedged 25
Slide 26: Increase in working capital due to strong business growth
Increase in working capiital due to strong business bus ess g growth o t aand d co commmodity od ty price p ce increases c eases • Primary driver is continued growtth in volume of business • Commodity price increases drive inventory levels which in turn drives receivables and overall work king capit
Slide 27: Conservative financial profile with strong liquidity and credit availability
Conservative financial pro ofile with strong liquidity and credit availability In S$M, as of Jun 2010 7,496 2,993 6,636 Short Term 3,920 743 3 Medium 2,228 Term 1 1,194 Long Term 260 412 2,382 Cash & Fixed RMI* Secure ed Bank lines Availability y Total equivalents deposits receivab bles liquidity Fa
Slide 28: Balance sheet Analysis: Gearing
Balance sheet Analysis: Gearing 28
Slide 29: Conservative capital structure & financial policies
Conservative capital structure & financial policies Net debt/Equity as of June 30, Net debt/Equity as of June 30, 2009 (x) 2010 (x) -S$1,647 mm - - S$513mm S$2,228m -S$743mm m Note: Equity is before fair value adjustment reserves ward *RMI: inventories that are liquid, hedged, or sold forw Olam’s ca
Slide 30: Conservative financial profile with strong liquidity
Conservative financial pro ofile with strong liquidity Interest coverage g ratio1 ( (x) ) Net debt2/ /Equity q y3 ( (x) ) 11.8x 88 8.8x 0.43x 0.39x FY09 FY10 FY09 FY10 1. Interest coverage ratio: (EBITDA – Interest exp pense passed on to customers)/(Total interest expense - interest expense passed o
Slide 31: Operating cash flows adjusted for liquid inventories and secured receivables
Operating cash flows adjusted for liquid inventories and secured receivables Cash flow summary (S$mm) As reported FY10 FY09 Operating cash flow before working capital changes 531 331 Changes in working capital (Increase)/decrease in inventories (637) (176) Decrease/(increase) in receivables (811) 23
Slide 32: Delivering our Strategy
FY2010 Full Yearr Results Briefing Delivering our o Strategy 32
Slide 33: Agenda
Agenda • Olam 2009 Corporate Strategy: Recap • Executing our strategy: Status S update • Executing g our strategy: gy Outcomes O & Results - Yr 1 • M&A: Accelerating profita able growth 33
Slide 34: 2009 six-year corporate strategy (FY2010-15)
In 2009, we announced our 6-ye ear corporate strategy ((FY2010-15)) to increase our margins g &ggrow intrinsic value 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, ROI IC-WACC); 2) Increase th
Slide 35: Enhancing portfolio by integrating into higher margin value chain segments
We decided to enhance our portfolio p by selectively integrating g g into higher g marrgin g value chain segments g U t Upstream S Supply l Ch h i hain Mid t Midstream D Downstream t • Secondary • Contract mfg/ • Plantations (perennial tree crops) • Sourcing/origination Private Label processing • Fa
Slide 36: Upstream and midstream/downstream share of EBT and capital employed
We decided to enhance our portfolio p by selectively integrating g g into higher g marrgin g value chain segments g Upstream + Mid/Downstream targeted to grow … with increased share of total capital from 26% to 50% of EBT contribution … employed from ~19% to 41% Olam EBT Olam Capital Employed CFS 0.
Slide 37: Goal to double net profit margins and increase intrinsic value
Our goal was to double Net Profit Margins & increase intrinsic value by y 3-4x overr the next two 3-year y cycles y NP PAT margin FY20 015F ≥4% 4 Earnings Equity per Share p Spread CAGR FY2015F Intrinsic FY2015F ≥10% Value FY20 015F ≥ 20% 3-4x Return on Equity ROIC (BoPe) FY2015F FY2015F ≥12% ≥ 20%
Slide 38: Diversified portfolio focused on agri complex: FY2000
Olam is developing a well diversified, uniquely shaped portfolio focused on a single g commodity y as sset class ((agri g complex) p ) FY2000 Upstream (farming, plantations) Supply Chain/ VA Services Midstream (VA processing) Downstream Cashew L Integrated Peanuts value chain Almonds global leadersh
Slide 39: Diversified portfolio focused on agri complex: FY2005
Olam is developing a well diversified, uniquely shaped portfolio focused on a single g commodity y as sset class ((agri g complex) p ) FY2005 Upstream (farming, plantations) Supply Chain/ VA Services Midstream (VA processing) Downstream Cashew L Integrated Peanuts value chain Almonds global leadersh
Slide 40: Diversified portfolio focused on agri complex: FY2010
Olam is developing a well diversified, uniquely shaped portfolio focused on a single g commodity y as sset class ((agri g complex) p ) FY2010 Upstream (farming, plantations) Supply Chain/ VA Services Midstream (VA processing) Downstream Cashew L L Integrated Peanuts L L value chain Almonds L global
Slide 41: Diversified portfolio focused on agri complex: FY2015
Olam is developing a well diversified, uniquely shaped portfolio focused on a single g commodity y as sset class ((agri g complex) p ) FY2015 Upstream (farming, plantations) Supply Chain/ VA Services Midstream (VA processing) Downstream Cashew L L Integrated Peanuts L L value chain Almonds L L L glo
Slide 42: Agenda
Agenda • Olam 2009 Corporate Strrategy: Recap • Executing our strategy: Status S update • Executing g our strategy: gy Outcomes O & Results - Yr 1 • M&A: Accelerating profita able growth 42
Slide 43: Five strategic thrusts to drive Olam's growth
Five strategic thrusts ideentified to drive Olam’s growth g o t choices c o ces aand d po portf tfolio o o shape s ape gogoing g forward o a d 1 2 3 4 5 Downsize/ Selectively Optimisse and exit/ prune Invest to achieve expand into extract Build on latent unattractive integrated value attractive valu
Slide 44: Integrated value chain leadership: Edible nuts
Achieving integrated value v chain leadership: 1 Edible nuts SELECT INI ITIATIVES TimberCorp’s Almond d Orchards acquisition • Platform to achieve integrated vallue chain leadership in almonds, the largest edible nut category • Profit pool analysis revealed that up pstream is the most profitable par
Slide 45: Integrated value chain leadership: Coffee
Achieving integrated value v chain leadership: 1 Coffee SELECT INI ITIATIVES Laos plantations Vietnam soluble investments coffee plant • Identified Laos as the lowest cost • Investment of ~S$70M$ with a Arabica coffee producer globally total capacity of about 7,000 MT • Acquired land on long lease a
Slide 46: Value chain adjacencies: Cocoa
Selectively expand into o value chain adjacencies: 2 Cocoa SELECT INI ITIATIVES Cote d’Ivoire d processing • Integral part of Cocoa Global Strategy y to supply quality Cocoa Products to Chocolate Manufacturers • Investment of S$60.9M in a 60K MT Cocoa C Processing and Usinage Plant to produce Cocoa
Slide 47: Build on latent assets: CFS & Packaged Foods
Build on latent assets: Commodity Financial 4 Services Se ces (C (CFS) S) & Packa ac aged Foods oods Business us ess ((PFB)) CFS Packaged Foods • The CFS business is being organically • Started Packaged g Foods Business through g launch d developed l d of Coffee Mix products in select markets in • C
Slide 48: Downsize/Exit underperforming businesses, origins and profit centres
Downsize/Exit unde erperforming 5 businesses, origins and profit centres Downsized/Pruned 23% of Exited unattractive businesses original profit centres Number of Profit Centres (PCs) • Exited Pulses business,, 300 improving overall segment 230 profitability 200 -11 -2% 2% off overall ll PBT in 2009
Slide 49: Acquired capabilities to execute on strategic thrusts
We have also acquired an nd established strong capabilities to execute on our strategic thrusts M&A Effectiveness Capital Efficacy • Well defined M&A discipline, aligned with • Built B ilt Balance B l Sheet Sh t flexibility fl ibilit through th h innovative i ti corporate strategy and goals sources
Slide 50: Expanded operational capabilities through new talent
We have expanded our operational o capabilities through acquiring new ttalent Supply Chain/VAS Midstream Richard Haire Robert Hunink Bob Dall’Alba Mukul Mathur Managing Director President Sr. Vice President Sr. Vice President Stephen Driver Greg Estep Someswara Rao Regional Head Global Head of Cotto
Slide 51: Agenda
Agenda • Olam 2009 Corporate Strrategy: Recap • Executing our strategy: Status S update • Executing g our strategy: gy Outcomes O & Results - Yr 1 • M&A: Accelerating profita able growth 51
Slide 52: Investments across prioritised value chain segments
We have invested significanntly across prioritised value chain segments g in line with our Corporate p Strategy gy FY10 Total Investments (organic c and inorganic)* S$ 1,462M 1 462M Selected Investment Initiatives* 100% • Spices (Grinding in Vietnam) • Cashew (Mech Processing in IVC & Nigeria) 80 Mi
Slide 53: Initiatives on strategy; ~80% executed or on track
All initiatives are on strategy;; ~80% of initiatives identified in the 2009 Corporate p Plan are either executed or on track Invest to achieve Selective ely expand Optimise and extract On plan” “New initiatives” integrated value into attra active value Build on latent assets full value from core ch
Slide 54: Strong increase in operating and after tax margins
This year, we have regis stered a strong increase in operating and after tax margins Olam Margin Performance (FY10) 13% 100 bps 10.1 150 10 bps 9.0 8.6 7.1 80 0 8 bp ps 5 5.8 5.0 100 5 bps 50 3.2 bps 26 2.6 3 2.2 2.1 2009 2010 2009 2010 2009 2010 2009 2010 2009 2010 0 Gross Net EBITD DA PBT PAT Cont
Slide 55: Early results exceeded expectations towards 2015 targets
Early results have exceeded expectations with strong trajectory towards achieving 2015 targets NPAAT Target mar argin g FY20 010A 2.6 6% Actual NPAT margin m FY201 15F ≥ 4% % Equity EPS S Spread d Equity E it E Earnings i change FY2015F FY2010A Spread per Share FY2010A 12-15% 19% FY2015F Intrin nsic
Slide 56: Value Chain Integration: Outcome/Results
Value Chain Integration: Outcome/Results Value Chain Sales Revenue Net Contribution EBITDA Initiatives (in S$’000) (NC) (in S$’000) (in S$’000) Jun 10 Jun 09 Jun 10 Jun 09 Jun 10 Jun 09 Supply Chain & VAS 9,162,602 7,809,296 635.114 469,226 403,768 351,932 Margin (%) 6.9% 6.0% 4.4% 4.5% Upstream 219
Slide 57: NC uplift driven by improvements across all value chain segments
NC uplift this year drive en by improvements across all value chain n segments Olam Net Contribution (S$ M) CAGR (09-10) S$1,000M S$ ,000 32 25 901 48% 140 CFS (8%) Mid/ 800 (11%) Downstream 97 607 (48%) ) 600 (33%) Supply Chain/ 400 % off VAS incremental NC 200 Upstream 0 2009 Upstream Supply y Mid
Slide 58: EBITDA uplift driven by improvements across all segments
EBITDA uplift this year driven d by improvements across all value chain s segments Olam EBITDA (S$ M) CAGR (09-10) S$800M S$800 40 20 605 40% 600 CFS 26 86 (12%) Mid/ (23%) Downstream 434 (15% ) 400 (50%) % of Supply incremental Chain/ VAS EBITDA 200 Upstream 0 2009 Upstream Supply Midstream/ CFS 20
Slide 59: Inroads into more profitable parts of the value chain
Significant inroads mad de in entering more profitable parts of the value v chain Midstream/Downstream Olam PBT breakdown by value chain • Robust FY2010 growth: NC by 26.3% to S$156M and EBITDA by 61 61.8% 8% to S$106M 1% 100% • 19 mid/downstream initiatives executed in 6% 10 0% FY2010, of which 14
Slide 60: Agenda
Agenda • Olam 2009 Corporate Strrategy: Recap • Executing our strategy: Status S update • Executing g our strategy: gy Outcomes O & Results - Yr 1 • M&A: Accelerating profita able growth 60
Slide 61: 2007 M&A growth plan objectives and guidelines
In 2007 we embarked on our M&A growth plan with clear objectiives & guidelines Objectives Guidelines Freq quency • We will seek to build our M&A expertise over a multi-year period through a series of • Build leadership position small deals (“string of pearls” approach) in an existing business S Size
Slide 62: Rigorous M&A approach
Rigorous M&A approach to ensure strategic alignment a g e taand d value a ue acc accrretion et o Target Corporate M&A Investment Commercial Post merger screening Strategy Strategy thesis due diligence integration process Olam core M&A deal team in place witth ‘end-to-end’ responsibility •Growth visi
Slide 63: Significant acquisitions and investments across the value chain
Significant acquisitions s and investments made across the value chain FY2007 FY200 08 FY2009 FY2010 De Francesco OTP (Formerly SK Foods) Edible Nuts, Spices & * Beans Foods Confectio- nery & F Beverage Ingredients PT DUS Food GSIL Staples & Sugar Mill Packaged Foods als Industria Industrial SECO Ra
Slide 64: Strong acquisitions & investments track record
Strong acquisitions & innvestments track record: on strategy and delivering healthy returns Olam acquisitions and investments Total = S$ 1,771M 2007-2010 (S$ M) Total (ex Gilroy) = S$ 1,422M (ex. 551 207 1,012 100% NZFSU (Dairy) SECO (Cotton) IMC (Peanut) Sifca/Nauvu Gilroy Foods • 17 deals complete
Slide 65: Contribution from Acquisitions
Contribution from Acq quisitions (in S$ million) FY2 2010 FY2009 Volume (Metric Tons) 7,006,478 , , 5,720,640 Sales 10,4 455.0 8,587.9 NC 90 01.0 607.2 NC Margin % 8.6% 7.1% EBITDA 60 07.3 430.3 EBITDA Margin % 5.8% 5.0% FY2010 FY2009 % Increase Existing Acquired Exis sting Acquired Existing Acquire
Slide 66: M&A has augmented organic growth and improved profitability
M&A has augmented organic growth and improved our overall profitability p Olam Net Contribution (2009-2010) NET CONTRIBUTION (S$ M) CAGR (09-10) S$1,000M 122 901 48% 800 171 Acquired Acq i ed 86% Business 607 600 400 Existing 36% Business 200 0 2009 Existing Business s Acquired Business 2010 Net Con
Slide 67: Acquisitions tracking above investment theses: ROE
14 out of 17 deals are trac cking above investment ttheses; eses; steady state retu etuurns u se expected pected to be higher g e Olam Acquisitions Performance (FY10) Return on Equity (ROE) 150% 132.2 25.4% weighted average ROE in 100 FY2010 60.3 50.5 49.0 50 26.3 26 6.2 23.3 19.7 14.1 10.1 05 0.5 0
Slide 68: Acquisitions tracking above investment theses: ROIC
14 out of 17 deals are trac cking above investment ttheses; eses; steady state retu etuurns u se expected pected to be higher g e Olam Acquisitions Performance (FY10) Return on Invested Capital (ROIC) 125% 13.9% 101.2 weighted 100 average ROIC in FY2010 75 50 32 4 32.4 28.1 23.5 22.5 25 3.3 13 13.1
Slide 69: Acquisitions/investments in line with expectations (1/2)
Most of our acquisition ns/investments are in line with expectations s (1/2) SELECTED DEALS Strong Weak Investment Stake Earnings Management Platform Investment amount Value chain Value unlocked % acc etion accre retention etention fo growth for g o th (S$ M) TimberCorp 363 100 Upstream (Continuing
Slide 70: Acquisitions/investments in line with expectations (2/2)
Most of our acquisition ns/investments are in line with expectations s (2/2) SELECTED DEALS Strong Weak Investment Stake Earnings Management Platform Investment amount Value chain Value unlocked % accrettion retention for growth (S$ M) Crown Flour 151 99.5 Midstream Mills Open Country 108 24.99 Mids
Slide 71: M&A role in pursuing profitable growth
M&A has and will continu ue to play an important role as we pursue profita able growth • M&A has helped overc come industry barriers to enable entry in attractive markets M&A an aid • It has also enabled us leapfrog competition to secure leadership to execute position and attain suuperior profitabil
Slide 72: Assessment of two M&A transactions
Assessment of two M& &A transactions 72
Slide 73: QCH example: sound investment thesis
QCH example: A soun nd investment thesis underpinned the QCH ac cquisition QCH Profile Q Investment facts • Australia’s largest cotton company Date June 2007 with volume of 250K tons per In nvestment annum details: Final price S$216M • Key activities include: - Sourcing and origination Ownership 100
Slide 74: QCH example: significant synergies for combined entity
QCH example: Value from QCH and Olam created significant synergies forr the combined entity QCH to Olam Olam to QCH • Access to keyy cotton origins g USA, • Embed ‘stretch stretch growth ambitions ambitions’ Brazil and Australia and strong performance • Access to long staple, premium, high managemen
Slide 75: Olam Cotton volume growth after QCH integration
With successful integration, Olam Cotton volume has as achieved ac e ed ggrowth s g ificantly o t sign ca t y above abo e market a et Significant growth for Cotton unit … as a result of the successful after acquisition… integration • Key functions fully centralised in Olam Cotton production Volume (
Slide 76: KFI example: attractive target to enter Dehydrates
KFI example: Attractiive target for Olam to enter the Dehydrates business b KFI overview Investment breakdown Date October 2007 • One of the largest processors of In nvestment dehydrated garlic in China with details: Final price S$25.2M superior processing technology • Pioneer in enabling acceptance
Slide 77: KFI example: strategic and business fit
KFI example: Strong sttrategic and business fit with Olam’s Olam s Spices & Deh hydrates business KFI to Olam Olam to KFI • Redefinition of BU scope with entry into • Capital to fuel domestic and international de-hydrates/ingredients (Olam expansion previously a whole spices supplier) • Cross sell K
Slide 78: KFI example: significant profit growth expected
KFI example: Significant profit growth expected through successful integrration with Olam Strong growth in profitability after … as asset is being successfully acquisition… integrated • Key marketing capabilities fully EBT Garlic Dehydrates (Indexed, 2007=1) integrated into Olam CAGR • Smooth and sy
Slide 79: Pivotal acquisitions of QCH and KFI created earnings platform
Pivotal acquisitions of QCH Q and KFI have helped create a substantial earn nings platform Processing capabilities Gilroy Foods in US Asset buyout from major customer Jun 2010 Share grower relationships De Francesco Turnaround of a distressed plant Dec 2008 Aug 2007 Olam Tomato Processing (SK Foods)
Slide 80: Executive summary (1 of 2)
Executive summary (1 of 2) • In 2009, we announced our 6-year Corporate Strategy (FY2010-15) with a g goal to double ourr net p profit margins g and increase Intrinsic Olam 2009 Value by 3-4X Corporate • We decided to enhance our portfolio by selectively integrating into Strategy: higher margin valu
Slide 81: Executive summary (2 of 2)
Executive summary (2 of 2) • All initiatives are on strategy; ~80% of initiatives identified in the 2009 Corporate Plan are either executed or on track Executing • Early results have exceedded expectations with a strong trajectory our towards achieving 2015 ta argets strategy: - 29% ROE achieved and
Slide 82: Thank You
Thank You The Brand Behind The Brands