Olam Group Limited · SGX:VC2
Olam — FY2020 Earnings Presentation
42 slides from Olam's earnings presentation, Feb 26, 2021
Slide 1: Full Year 2020 Results Briefing
Full Year 2020 Results Briefing February 26, 2021
Slide 2: Presenters
Presenters Sunny Verghese A. Shekhar N. Muthukumar Co-Founder and Group CEO Executive Director Group CFO CEO, OFI Olam International Limited Results for Full Year ended December 31, 2020 | February 26, 2021 2
Slide 3: Notice
Notice This presentation should be read in conjunction with Olam International Limited’s Financial Statements and Management Discussion and Analysis for the Full Year ended December 31, 2020 (“2020”) and its announcement entitled “Re-organisation of Olam: Unlocking Long Term Value” lodged on SGXNET
Slide 4: Cautionary note on forward-looking statements
Cautionary note on forward-looking statements • This presentation and announcement entitled “Re-organisation of Olam: Unlocking Long Term Value” may contain statements regarding the business of Olam International Limited and its subsidiaries (‘Group’) that are of a forward-looking nature and are the
Slide 5: Agenda
AGENDA 2020 Group financial highlights Covid-19 response and outlook Segmental performance by operating groups Re-organisation Plan : Progress update Key takeaways
Slide 6: 2020 Group financial highlights
2020 Group financial highlights
Slide 7: Group 2020 results at a glance
Group 2020 results At a glance VOLUME & REVENUE EBIT PATMI 44.4 M MT S$35.8 B S$1,070 M S$246 M +11.7% +8.6% +1.2% -22.3% Operational Free Cash Gearing PATMI Flow S$678 M FCFE from 1.50x to +36.0% -$592 M 1.72x Note: Comparison is made against 2019 financial results which have been restated due to c
Slide 8: Group 2020 financial highlights
Group 2020 financial highlights Strong results amid Healthy balance sheet Final Dividend Covid-19 challenges amid rising prices 36.0% growth in Operational PATMI Strong cash position of S$3.1 billion as Board of Directors recommends in 2020 to S$677.8 million at end-2020 final dividend of 4.0 cents
Slide 9: Good progress in implementing Strategic Plan
Good progress in implementing Strategic Plan • Strategic investments in OFI to pivot to a more value-added ingredients and solutions business: Investments in Spices dehydrates (acquisition), green chile pepper (acquisition), Soluble Coffee (greenfield) and Dairy processing (greenfield) • Good execut
Slide 10: Consolidated results by operating groups 2020 at a glance
Consolidated results by operating groups 2020 at a glance Volume ('000 MT) Revenue (S$ m) 2.9% 8.5% 4.9% Volume 35.0% OIL ('000 MT) OIL 44,409.7 OFI 35,820 20,058.4 OFI +11.7% OGA +8.6% +5.0% OGA 88.6% 60.1% EBIT (S$ m) IC (S$ m) (15.3%) 22.7% 20.6% OIL OIL 1,069.5 OFI 16,665.7 OFI +1.2% OGA +5.6% O
Slide 11: Volume grew 11.7%
Volume grew 11.7% Led by OGA’s Food & Feed - Origination & Merchandising segment Volume by Operating Groups, '000 MT +11.7% 4,988 44,410 -304 39,752 -26 Restated 2019 OFI OGA OIL 2020 Olam International Limited Results for Full Year ended December 31, 2020 | February 26, 2021 11
Slide 12: EBIT steady at S$1.1 billion
EBIT steady at S$1.1 billion Robust growth at OGA; resilient OFI results despite Covid-19 EBIT by operating groups, S$ million +1.2% 133 1,070 1,057 -98 -22 Restated 2019 OFI OGA OIL 2020 Olam International Limited Results for Full Year ended December 31, 2020 | February 26, 2021 12
Slide 13: Operational PATMI grew 36.0%
Operational PATMI grew 36.0% Reported PATMI declined 22.3% on net exceptional losses PATMI and Operational PATMI, S$ million -22.3% 124 15 316 12 29 246 -250 Restated 2019 EBIT^ Net Finance Taxation Exceptional Non-controlling 2020 Costs Items Interests Operational 498 +36.0% 678 PATMI (S$ M) ^ Excl
Slide 14: 5.6% increase in invested capital
5.6% increase in invested capital 17.1% increase in working capital on higher prices Working Capital Fixed Capital Net gearing Adjusted net gearing 1.72 16,666 1.50 15,832 15,789 14,812 6,766 7,931 7,705 6,844 0.63 8,127 7,968 9,023 8,735 0.38 Dec-17 Dec-18 Restated Dec-20 Dec-19 EBIT/IC 5.8% 5.5% 6
Slide 15: Free cash flow
Free cash flow Negative FCFE on increased investments in working capital resulting from higher volumes, higher commodity prices and lower supplier credit Free Cash Flow to Equity, S$ million -727 241 135 119 49 -592 -1,065 -71 Restated 2019 Operating Cash Changes in Tax Paid Capex / Net Interest 202
Slide 16: Ample liquidity
Ample liquidity Total borrowings and available liquidity, S$ Million as at December 31, 2020 Short Term Long Term 7,186 17,291 +3,132 14,159 1,139 6,563 5,850 3,116 7,596 Cash and Short- RMI* Secured Unutilised Available Total term Fixed Deposits Receivables Bank Lines Liquidity Borrowings * RMI: Re
Slide 17: Covid-19 response and outlook
Covid-19 response and outlook
Slide 18: Covid-19: Our response
Covid-19 : Our response 5 PRIORITIES Primary focus has been to ensure health and safety of our 1 employees and food safety of our customers Business Continuity Plans continue to be activated in all key 2 countries and sites in Africa, Americas and Asia To mitigate impact on demand, supply and financ
Slide 19: Covid-19 relief efforts
Covid-19 relief efforts US$7+ million in financial and in-kind donations, benefiting over 11.5 million employees, farmers and their families across 33 countries Public awareness & community support Medical relief and healthcare provision Olam Coffee Appeal raised US$349,670 in customer donations to
Slide 20: Covid-19 impact and outlook
Covid-19 impact and outlook • Despite challenging conditions for many key markets across the world, there has been a pick-up in volume and demand due to China’s rapid recovery and many Asian countries which have been easing lockdown measures. Substantive fiscal support from governments and monetary
Slide 21: Segmental performance by operating groups
Segmental performance by operating groups
Slide 22: Olam Food Ingredients (OFI)
Olam Food Ingredients (OFI) S$ Million Ingredient Sourcing & Supply Chain EBIT Invested Capital Value-added Food Ingredients & Solutions +4.9% +2.1% -2.8% +6.1% 794 771 9,443 +43.3% 8,877 8,553 8,897 668 678 52% 50% 508 60% 50% 41% 58% 60% 63% 355 57% 55% 50% 59% 48% 50% 42% 40% 43% 40% 37% 45% 2017
Slide 23: OFI: Ingredient Sourcing & Supply Chain
OFI: Ingredient Sourcing & Supply Chain S$ Million EBIT Invested Capital +4.5% Working Capital +2.8% -6.4% Fixed Capital +0.6% 410 +48.2% 5,601 5,637 384 5,182 5,128 337 276 290 3,392 3,446 3,210 3,160 195 1,972 1,968 2,209 2,191 2017 2018 Restated 2020 Restated H2 2020 Dec-17 Dec-18 Restated Dec-20
Slide 24: OFI: Value-added Food Ingredients & Solutions
OFI: Value-added Food Ingredients & Solutions S$ Million EBIT Invested Capital +1.0% Working Capital +5.4% +15.5% +1.0% Fixed Capital 402 384 387 3,695 3,806 +37.3% 3,425 3,295 331 2,147 1,943 219 1,906 1,546 159 1,548 1,519 1,749 1,863 2017 2018 Restated 2020 Restated H2 2020 Dec-17 Dec-18 Dec-19 D
Slide 25: OFI: On track to deliver sustained growth
OFI: On track to deliver sustained growth • Resilient all-round performance despite the pandemic with strong earnings growth in H2 2020 • Increased customer focus by working closely with them to manage supply chain challenges, co-create innovative and sustainable solutions, and growing our customer
Slide 26: Olam Global Agri (OGA)
Olam Global Agri (OGA) S$ Million Food & Feed - Origination & Merchandising Food & Feed - Processing & Value-added Fibre & Ag Services EBIT Invested Capital +14.0% +40.3% +8.0% 462 +27.2% 3,780 312 330 44% 2,998 2,972 25% 16% 13% 225 45% 32% 2,122 30% 26% 42% 53% 59% 47% 34% 38% 36% 46% 31% 34% 28%
Slide 27: OGA: Food & Feed - Origination & Merchandising
OGA: Food & Feed - Origination & Merchandising S$ Million EBIT Invested Capital -1.5% Working Capital +59.1% +143.0% +35.8% Fixed Capital 203 979 936 150 428 547 745 66 385 50 402 185 551 145 200 191 2017 2018 Restated 2020 Dec-17 Dec-18 Restated Dec-20 EBIT/MT 2019 Dec-19 (S$) 4 3 5 6 EBIT/IC 5.2%
Slide 28: OGA: Food & Feed - Processing & Value-added
OGA: Food & Feed - Processing & Value-added S$ Million EBIT Invested Capital +9.7% Working Capital +86.2% Fixed Capital +15.9% -9.7% 218 1,742 166 1,573 442 387 117 1,010 982 86 333 284 1,300 1,186 677 698 2017 2018 Restated 2020 Dec-17 Dec-18 Restated Dec-20 EBIT/MT 2019 Dec-19 66 33 38 54 EBIT/IC
Slide 29: OGA: Fibre & Ag Services
OGA: Fibre & Ag Services S$ Million EBIT Invested Capital Working Capital Fixed Capital -24.9% +8.0% 96 +50.5% -34.7% 73 1,270 63 1,009 844 41 911 593 836 591 425 253 359 173 168 2017 2018 Restated 2020 Dec-17 Dec-18 Restated Dec-20 EBIT/MT 2019 Dec-19 70 46 40 26 EBIT/IC 9.0% 9.1% 8.7% 3.9% (S$) •
Slide 30: OGA: Continue to progress on strategic growth
OGA: Continue to progress on strategic growth • Continues to benefit from key secular trends: Growing food security agenda, rising protein consumption, emerging markets growth, rising tech adoption and sustainability focus • Diversify our business in emerging markets by enhancing presence in Asia •
Slide 31: Olam International (OIL)
Olam International (OIL) S$ Million De-prioritised/Exiting Assets Gestating Businesses Incubating Businesses (including corp adjustments) EBIT Invested Capital -149.2% -12.2% 57 34 19 3,958 4,138 3,921 0 0 3,443 -40 -36 -67 1,965 1,674 2,138 1,360 -117 -45 -69 -33 -66 1,820 2,173 2,247 2,083 -60 -59
Slide 32: OIL: Incubate platforms for future growth
OIL: Incubate platforms for future growth Criteria for selecting Engine 2 ventures •1 Disruptive idea •2 Aligned to our purpose: ‘Re-imagining Global Agriculture & Food Systems’ •3 Leveraging Olam’s core strengths & unique assets •4 Material & Scalable opportunity – large enough opportunities that c
Slide 33: Re-organisation Plan: Progress update
Re-organisation Plan : Progress update
Slide 34: Re-organisation update
Re-organisation update STEP 4 OFI IPO & Concurrent De- merger, OGA STEP 3 Strategic Options Carve-out and Subject to shareholder and regulatory approvals: STEP 2 Separation • Target OFI listing by H1 2022 STEP 1 Re-organisation • Dedicated implementation • OFI will be demerged from the Olam • Develo
Slide 35: Key takeaways
Key takeaways Resilient results despite Covid-19 challenges: 01 • Strong 36.0% growth in Operational PATMI in 2020 to S$678 million with Operational ROE at 11.2% • Strong operating performance by OFI in H2 2020 and OGA in 2020 Significant progress on Re-organisation Plan • Re-segmentation and re-org
Slide 36: Appendix
Appendix
Slide 37: P&L statement
P&L statement S$ million 2020 Restated 2019 % Change Volume ('000 MT) 44,409.7 39,751.8 11.7 Revenue 35,820.0 32,992.7 8.6 Net (loss)/gain in fair value of biological assets^ (60.3) 19.0 n.m. Depreciation & Amortisation^ (561.3) (495.8) 13.2 EBIT^ 1,069.5 1,057.3 1.2 Net Finance costs^ (415.7) (539.
Slide 38: P&L statement
P&L statement S$ million H2 2020 Restated H2 2019 % Change Volume ('000 MT) 24,351.3 20,651.6 17.9 Revenue 18,739.5 17,048.8 9.9 Net (loss)/gain in fair value of biological assets^ (64.1) 23.0 n.m. Depreciation & Amortisation^ (288.7) (246.3) 17.2 EBIT^ 645.8 535.3 20.6 Net Finance costs^ (185.5) (2
Slide 39: Exceptional items
Exceptional items Restated S$ million 2020 Restated 2019 H2 2020 H2 2019 Profit on sale of partial stake in ARISE 121.0 40.4 (2.0) 40.4 associates Profit on sale of Far East Agri (PT DUS) 49.1 - (0.7) - Profit on sale of Sugar plant in India 1.5 - 1.5 - Exit/Closure costs (119.0) (315.8) (77.6) (298
Slide 40: Balance sheet
Balance sheet S$ million 2020 Restated 2019 % Change Fixed Capital 8,309.9 8,616.0 (306.1) Right-of-use assets 712.2 719.3 (7.1) Uses of Working Capital 7,455.7 6,627.8 827.9 Capital Cash 3,115.9 3,179.6 (63.7) Others 601.7 229.8 371.9 Total 20,195.4 19,372.5 822.9 Equity & Reserves 6,425.4 6,589.3
Slide 41: Cash flow statement
Cash flow statement S$ million 2020 Restated 2019 YoY Change Operating Cash flow (before Interest & Tax) 1,697.3 1,455.8 241.5 Changes in Working Capital (1,160.9) (95.6) (1,065.3) Net Operating Cash Flow 536.4 1,360.2 (823.8) Net interest paid (437.0) (555.8) 118.8 Tax paid (177.8) (106.8) (71.0) C
Slide 42: 2020 Results Briefing
2020 Results Briefing olamgroup.com/investors.html ir@olamnet.com