Olam Group Limited · SGX:VC2
Olam — Investor Day (September 2013)
40 slides from Olam's investor day presentation, Sep 30, 2013
Slide 1: Investor Day – Grains
Investor Day – Grains 30 September 2013 | Singapore 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: Global Grains Team
Global Grains Team K C Suresh, President and Global Head Saurabh Mehra, Vice President, Head of Milling Richard Hedges, Vice President, Technical Head, West Africa Alexander Bessarabov, General Manager, Russia David Johnson, Executive General Manager, Australia 3
Slide 4: Agenda
Agenda • Global Footprint • Grains Industry Trends • Our Strategy • Wheat Milling • Origination & Trading • Our Competitive Advantage • Q&A 4 4
Slide 5: We have built a significant, successful business in 4 years
We have built a significant, successful business in 4 years Moscow Rostov Penza Canada JV Portland Kiev Ghana Nigeria Dubai Senegal Cameroon Singapore Legend: Mill Projects Farming Durban Newcastle Port Melbourne Trading Shipping Elevator • 3rd largest wheat miller in Nigeria & Ghana • 2nd largest e
Slide 6: Industry Trends
Industry Trends • Grain acreage in former Soviet Union has shrunk by 30% from mid-60s to now. It has significant potential to increase production. • Emergence of South America – especially Brazil as a supply powerhouse. • Single window marketing dismantled in Canada, similar to Australia. • There ar
Slide 7: Global majors strongly entrenched in the mainstream grains & oilseeds trade flows
Global majors strongly entrenched in the mainstream grains & oilseeds trade flows Export trading volume (million metric tonnes, 2010) A-D: Global Majors 100% Others G Others 80% F E E 60% D D C C 40% B B 20% A A 0% Grains Oilseeds (Wheat, corn, barley, sorghum, rye) (excluding palm) Where should Ola
Slide 8: Wheat is the best fit
Wheat is the best fit Corn Soybean Wheat World trade - Corn World trade - Soybean World trade - Wheat (in million MT) (in million MT) (in million MT) 94 92 94 94 136 135 100% 100% 100% Others Others Others Others S. America 80 S. America 80 80 Others S. EU S. EU America N. America America 60 60 60 N
Slide 9: Wheat trading and imported milling in SSA most attractive and winnable
Wheat trading and imported milling in SSA most attractive and winnable Wheat Value Origination Chain Farming Elevation Milling & Trading Olam Participation Domestic Imported Imported Milling Milling Milling SSA Profitability High Medium Low Low Medium High Returns Medium High High Low Medium High Ea
Slide 10: Our Strategy – Dual Complementary Paths
Our Strategy – Dual Complementary Paths Objectives BU • To achieve 10% market share in Wheat Milling in Sub-Saharan Africa (4,000 MT per day) growth goal by • To grow the origination and trading business organically with selected investments in enabling assets by focusing on existing operations in B
Slide 11: Path 1: Sub-Saharan African Milling
Path 1: Sub-Saharan African Milling Objectives BU • To achieve 10% market share in Wheat Milling in Sub-Saharan Africa (4,000 MT per day) growth goal by • To grow the origination and trading business organically with selected investments in enabling assets by focusing on existing operations in Black
Slide 12: Growing demand = Milling opportunity
Growing demand = Milling opportunity • Africa accounts for about 26% of the global wheat trade - Sub-Saharan Africa accounts for 12% • Africa imports 33m MT of wheat or 60% of its consumption - Sub-Saharan Africa imports 15m MT • Consumption expected to grow at 4-5% p.a. • Tropical climate in Africa
Slide 13: Sub Saharan Africa – Wheat Milling Market
Sub Saharan Africa – Wheat Milling Market Selection Criteria 1. Market Attractiveness: Mauritania a) Political Stability Mali Niger b) Existing Flour Market Size Chad Senegal c) Potential For Growth G Bissau B Faso Guinea Nigeria 2. Industry Protection: Ghana Sierra CDI Leone CAR a) Flour Import Pos
Slide 14: Sub-Saharan Africa – Selected geographies
Sub-Saharan Africa – Selected geographies •Based on our selection criteria, we entered the following geographies: - Nigeria: Acquired Crown Flour Mills (Jan 2010) - Ghana: Greenfield wheat mill (Apr 2011) - Senegal: Planned greenfield wheat mill (Jun 2014) - Cameroon: Planned greenfield wheat mill (
Slide 15: Nigeria – Large importer, High growth
Nigeria – Large importer, High growth • Population of 160 million, over 50% urban and with a median age of just 18 years • Rate of urbanisation of 3.8% - Leading to demand growth for Bread / Pasta / Noodle / Biscuits • Largest importer of wheat in Sub-Saharan Africa - 4m MT/year - Addressable Flour
Slide 16: Nigeria
Nigeria • CFM acquired in Jan 2010 • Total capacity: 714,000 MT • Asset details - Lagos Milling capacity: 1,580 MT/day Storage capacity: 48,000 MT - Warri Milling Capacity: 800 MT/day Storage capacity: 20,000 MT - Product Range Bread Flour Noodle Flour Biscuit Flour Semolina • Olam market rank: 3 16
Slide 17: Ghana – Politically stable, High growth
Ghana – Politically stable, High growth •Ghana Market - Market Size (2012/13): 450,000 MT - Market Growth rate: 7.5% - Olam market rank: 3 •Asset Details - Plant Capacity: 150,000 MT - Storage capacity: 40,000 MT - Fully automated PLC controlled mill 17
Slide 18: Diverse product range
SUPREME FLOUR A Prod w&. 50KG MILLED FROM HARD WHEAT s/ QD WHEAT. 1
Slide 19: Senegal – Stable currency, High growth
Senegal – Stable currency, High growth •Senegal Market •Asset details - Market size (2012/13): 515,000 MT - Planned capacity: 150,000 MT - Growth rate: 6.5% - Storage capacity: 25,000 MT - Expected Olam rank: Top 3 - Fully automated PLC controlled mill - Expected commissioning: Jun 2014 19
Slide 20: Cameroon – Stable currency, Distribution synergy
Cameroon – Stable currency, Distribution synergy •Asset Details - Planned capacity: 150,000 MT - Storage capacity: 20,000 MT - Fully automated PLC controlled mill - Expected commissioning: Dec 2014 •Cameroon Market - Market size (2012/13): 555,000 MT - Growth rate: 5.6% - Expected Olam rank: Top 3 2
Slide 21: Technical Excellence – a key differentiator
Technical Excellence – a key differentiator •Standardised mill design and processes •Online measuring systems adopted – first in SSA •Strong technical sales force – ability to respond quickly to customers •Central research and development center in Lagos •Tailoring end product to specific customer r
Slide 22: Food safety – key focus area
Food safety – key focus area •High focus on food safety - Adoption of new technology to enhance shelf life - Robust food safe processes - Metal detection - Flour redressing 22
Slide 23: Path 2: Origination/Exports from New Grain Origins
Path 2: Origination/Exports from New Grain Origins Objectives BU • To achieve 10% market share in Wheat Milling in Sub-Saharan Africa (4,000 MT per day) growth goal by • To grow the origination and trading business organically with selected investments in enabling assets by focusing on existing oper
Slide 24: Russia – Grains production and export potential
Russia – Grains production and export potential • World’s largest reserves of arable land – 121m ha (9%) • 20m ha of unutilised land (more than all arable land of France) • 52% of world’s black soils • 20% of world’s fresh water reserves • Yield increase potential by 35-40% through implementation of
Slide 25: Net exporter despite crop fluctuations
Net exporter despite crop fluctuations Total grains exports (in k MT) 30,000 25,000 20,000 15,000 10,000 5,000 - 07/08 08/09 09/10 10/11 11/12 12/13 13/14 (est.) 25
Slide 26: Russia – Export flows
Russia – Export flows •Grain export from deep water ports: 13m MT - Most grain elevator owners are not traders themselves - Capacity available to independent exporters •Grain export from shallow water ports: 11m MT - Most grain elevator owners are also traders - Olam has a competitive advantage via
Slide 27: Olam in Russia
Olam in Russia •Commenced grain operations in FY2009 •4 year CAGR volume growth of 127% •Key strengths: • Procurement • Deep understanding of global and domestic Russian supply and demand dynamics (S&D) • Strong risk management • Marketing presence in the Middle-East and Mediterranean markets 27
Slide 28: Russia – AZT shallow-water port terminal
Russia – AZT shallow-water port terminal AZT • Located in Azov on Don river • Land plot of 4.9 hectares • Storage capacity:48,000 MT • Throughput volume: 800,000 MT • Key features: - Truck intake of 5,000 MT per day - RW intake of 4,000 MT per day - Load rate of 5,000 MT per day - One berth - Can lo
Slide 29: Australia – Market structure
Australia – Market structure Grain Volumes • Grain market size (domestic and export): 30 – 40m MT • Grain export market size: 23-30m MT • Grain export from 18 ports • Domestic Market: 10m MT Market Dynamics • Infrastructure dominated by major players • Investment in supply chain post deregulation ch
Slide 30: Olam in Australia
Olam in Australia •Commenced grain operations in FY2009 •4 year CAGR volume growth of 54% •Key strengths: • Trading model focused on trading Interior Australian Opportunities (flat price, basis, track, domestic and container markets) • Model is efficient in working capital requirements • Reduces sup
Slide 31: Australia – Newcastle Agri-terminal (NAT)
Australia – Newcastle Agri-terminal (NAT) Newcastle Agri Terminal • Pictures of NAT • Co-owned by Olam • Storage capacity: 60,000 MT • Elevation capacity: 2,000 MT/hr • Dedicated rail loop for discharge Ownership of NAT and access to elevator capacity is the first step to building and controlling an
Slide 32: Our Competitive Advantage I. Emerging Market Expertise
Our Competitive Advantage I. Emerging Market Expertise •Attracting and retaining top quality talent into our milling operations in Africa •Sharing Customers, Costs, Channels and Capabilities with our other commodity businesses in Africa 32
Slide 33: Our Competitive Advantage II. Selective Value Chain Participation
Our Competitive Advantage II. Selective Value Chain Participation •Our unique presence in the Trading, Bulk Freight and Milling parts of the value chain allows us to exploit arbitrage opportunities in the market to maximise our profitability - Trading presence across various origins and markets - De
Slide 34: Summary
Summary Selected as an “Invest and Grow” platform in the recent strategy plan Going Forward: • We will continue to expand capacity in current milling markets • We will enter new Sub Saharan African milling markets • We will continue to look at investments in Logistics assets in existing Origination
Slide 35: Thank You
Thank You 35
Slide 36: Annexure: Speakers Profile – K C Suresh
Annexure: Speakers Profile K C Suresh K C Suresh joined Olam in Tanzania in 1994. From 1994 to 2000, he held various positions in origination, country management and trading in East Africa and Singapore. In 2000 Suresh left Olam to pursue an MBA and worked for Honeywell in Europe from 2001 to 2008 i
Slide 37: Annexure: Speakers Profile – Saurabh Mehra
Annexure: Speakers Profile Saurabh Mehra Saurabh Mehra joined Olam in 1999 in Ghana. From 1999 to 2006, he held various responsibilities in Ghana including origination and country management. In 2006 Saurabh moved to London to manage the physical and futures trading books for West African cocoa. In
Slide 38: Annexure: Speakers Profile – Richard Hedges
Annexure: Speakers Profile Richard Hedges Richard Hedges joined Olam Grains in 2009. In 2010 Olam acquired Crown Flour Mills. Hedges was the manufacturing and technical lead in a team of three which turned the company to profitability within the first year. Hedges is responsible for all technical as
Slide 39: Annexure: Speakers Profile – Alexander Bessarabov
Annexure: Speakers Profile Alexander Bessarabov Alexander Bessarabov joined Olam in 2009 as Head of Grains business unit in Russia, bringing his extensive experience in agricultural commodity markets in CIS countries. Since 1994 he was engaged in origination and exports of grains and oilseeds in ent
Slide 40: Annexure: Speakers Profile – D K Johnson
Annexure: Speakers Profile D K Johnson D K Johnson joined Olam Australia in May 2013 as General Manager of the Grains business unit. Prior to joining Olam, David worked at Emerald Grain as General Manager, Risk and Pricing. David had an extensive career at AWB including stints as Managing Director A