Olam Group Limited · SGX:VC2
Olam — Olam International — Q1 2009 Earnings Presentation
101 slides from Olam's earnings presentation, Nov 14, 2008
Slide 1: Q1 FY2009 Results Briefing
Olam International Limited First Quarter FY2009 Results Briefing g 14th November 2008 | Singapore 1 Q1 FY2009 Results Briefing 1
Slide 2: Read in conjunction with Q1 FY2009 financial results statement
This presentation should be read in conjunction with Olam International Limited’s First Quarter, FY2009 (Q1 FY2009) Financial Results for the period ended 30th September 2008 statement lodged on SGXNET on 14th November 2008. 2 Q1 FY2009 Results Briefing 2
Slide 3: 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. p Such forwar
Slide 4: Results Presentation: Outline
Results Presentation : Outline Results: Q1FY2009 - Consolidated P&L Analysis Results: Q1FY2009 - Segmental Analysis Results: Q1FY2009 - Balance Sheet Analysis Key Issues & Summary Q&A 4 Q1 FY2009 Results Briefing 4
Slide 5: Results: Q1 FY2009 Consolidated P&L Analysis
Results : Q1 FY2009 Consolidated P&L Analysis 5
Slide 6: Consolidated P&L Analysis: Sales Volume
Consolidated P&L Analysis : Q1 FY2009 Sales Volume : 1.101 million metric tons • Volume grew by 0.185 million metric tons • 20.1% growth over Q1 FY2008 • Volume growth across all 4 segments 6 Q1 FY2009 Results Briefing 6
Slide 7: Sales Volume Growth: Segmental Contribution
Sales Volume Growth : Segmental Contribution Sales Volume growth 20.0%, 0.185 mts Sales Volume (1,000 Mts) 10% 16% 36% 38% Growth Over Q1FY2008: 33% 17% 19% 10% 7 Q1 FY2009 Results Briefing 7
Slide 8: Consolidated P&L Analysis: Total Revenue
Consolidated P&L Analysis : Q1FY2009 Total Revenue : S$1,712 $ million • 24.4% growth over Q1FY2008 • Revenue growth across all 4 segments • Volume growth accounted for 77% of the revenue growth • 23% of the revenue growth was on account of price increases 8 Q1 FY2009 Results Briefing 8
Slide 9: Sales Revenue Growth: Segmental Contribution
Sales Revenue Growth : Segmental Contribution Sales growth 24.4%, S$336.0 million Sales Revenue (S$ M) 16% 23% 33% 28% Growth Over Q1FY2008: 40% 23% 23% 16% 9 Q1 FY2009 Results Briefing 9
Slide 10: Sales Revenue Growth: Sources
Sales Revenue Growth : Sources Sales Revenue Sales growth 24.4%, S$336.0 million (S$ M) 76 1,712 260 23% 1,376 77% 10 Q1 FY2009 Results Briefing 10
Slide 11: Consolidated P&L Analysis: Gross Contribution
Consolidated P&L Analysis : Q1FY2009 Gross Contribution (GC): S$171 $ million • 31.3% growth over Q1FY2008 • GC growth across all segments • GC per ton improved to S$156/ton from S$142/ton in Q1FY2008 11 Q1 FY2009 Results Briefing 11
Slide 12: Gross Contribution Growth: Segmental Share
Gross Contribution Growth : Segmental Share Gross Sales growth 31.3%, S$40.8 million Contribution (S$ M) 11% 26% 28% 35% Growth Over Q1FY2008: 44% 31% 31% 16% 12 Q1 FY2009 Results Briefing 12
Slide 13: Gross Contribution Growth: Sources
Gross Contribution Growth : Segmental Share CG growth 31.3%, S$40.8 million 15 171 26 35% 130 65% 13 Q1 FY2009 Results Briefing 13
Slide 14: Interest Costs
Interest Costs Total increase in interest costs S$12.3 million or 29.5% Q1FY2009 Q1FY2008 Increase % Increase (S$’000) (S$’000) (S$’000) Interest 54,270 41,907 12,363 29.5% Expenses Sales 1,712,777 1,376,720 336,057 24.4% Interest rate 7.52% 7.31% 0.21% 2.9% Interest variance due to interest rate in
Slide 15: Market pays for carry
Market pays for carry Product Market Unit Front Second Annualized Carry Month Month Carry Yield Pi Price Pi Price LIFFE GBP/MT 1,480 1,505 100 7% Cocoa NYBOT USD/MT 2,558 2,577 76 3% LIFFE USD/MT 1,976 1,992 96 5% Coffee NYBOT Usc/lb 130.5 134.8 17.4 13% LIFFE USD/MT 380 393.0 54 14% S Sugar NYBOT U
Slide 16: Consolidated P&L Analysis: Net Contribution
Consolidated P&L Analysis : Q1FY2009 Net Contribution (NC): S$117 $ million • 32.2% growth over Q1FY2008 • NC growth across all segments • NC per ton grew from S$97/ton in Q1FY2008 to S$106/ton in Q1FY2009 16 Q1 FY2009 Results Briefing 16
Slide 17: Net Contribution Growth: Segmental Share
Net Contribution Growth : Segmental Share NC growth 32.0%, S$28.4 million Net Contribution (S$ M) 11% 28% 24% 37% Growth Over Q1FY2008: 44% 30% 33% 18% 17 Q1 FY2009 Results Briefing 17
Slide 18: Net Contribution Growth: Sources
Net Contribution Growth : Sources NC growth 32.0%, S$28.4 million Net Contribution (S$ M) 10 117 18 89 36% 64% 18 Q1 FY2009 Results Briefing 18
Slide 19: Impact of FRS 102
Impact of FRS 102 The Th ffollowing ll i ttwo employee l Share S Sh Schemes h come under d ththe ambit bit off FRS 102 102: • Employee Share Subscription Scheme (ESSS) • Employee p y Share Options p Scheme ((ESOS)) The impact of FRS 102 on the Financial Statements is as follows: Carried Prior Period
Slide 20: Consolidated P&L Analysis: SG&A
C lid t d P&L Analysis Consolidated A l i : Q1FY2009 SG&A increased by 30 30.0% S$101.6 0% to S$101 6 million in Q1FY2009 Q1FY2009 Q1FY2008 Change g SG&A (S$million) 101.6 78.2 30.0% SG&A/Sales Ratio 5.93 5.68 (0.25) 20 Q1 FY2009 Results Briefing 20
Slide 21: Net Profit After Tax and EPS
Consolidated P&L Analysis : Q1FY2009 Net Profit After Tax (NPAT) : S$14.9 $ million • 62.0% growth over Q1FY2008 Earnings per Share (EPS) • 47.5% growth over Q1FY2008 • 0.87 cent/share Q1FY2009 vs 0.59 cent/share Q1FY2008 (based on weighted average no. of shares) 21 Q1 FY2009 Results Briefing 21
Slide 22: Results: Q1 FY2009 Segmental Analysis
Results : Q1FY2009 Segmental Analysis 22
Slide 23: Segmental Analysis Q1FY2009: Summary
Segmental Analysis Q1FY2009 : Summary Olam Consolidated •Turnover S$1,713 million • Volume 1.101 mmts • NC S$117 m • NPAT S$14.9 m Edible Nuts, Confectionery Food Staples & Fibre& Wood Spices & Beans & Beverage Packaged Foods Products Ingredients •Turnover $331 m •Turnover $592 m •Turnover $419 m •T
Slide 24: Segmental Analysis: Edible Nuts, Spices & Beans
Segmental Analysis : Edible Nuts, Spices & Beans Q1FY2009 Q1FY2008 Description p % Change g Amount S$/Ton Amount S$/Ton Volume 277,944 208,268 33.5 (metric tons) Revenue 331,566 1,193 236,828 1,137 40.0 (S$’000) Net Contribution 34,002 122 23,574 113 44.2 (S$’000) (S$ 000) 24 Q1 FY2009 Results Brief
Slide 25: Segmental Analysis: Confectionery & Beverage Ingredients
Segmental Analysis : Confectionery & Beverage Ingredients Q1FY2009 Q1FY2008 Description % Change Amount S$/Ton Amount S$/Ton Volume 202,520 172,510 17.4 (metric tons) Revenue 592,209 2,924 481,011 2,788 23.1 (S$’000) Net Contribution 29,873 148 22,964 133 30.1 (S$’000) (S$ 000) 25 Q1 FY2009 Results
Slide 26: Segmental Analysis: Food Staples & Packaged Foods
Segmental Analysis : Food & Staples & Packaged Foods Q1FY2009 Q1FY2008 Description p % Change g Amount S$/Ton Amount S$/Ton Volume 412,842 346,976 19.0 (metric tons) Revenue 419,410 1,016 341,329 984 22.9 (S$’000) Net Contribution 32 063 32,063 78 24 114 24,114 69 33 0 33.0 (S$’000) 26 Q1 FY2009 Res
Slide 27: Segmental Analysis: Fibre & Wood Products
Segmental Analysis : Fibre & Wood products Q1FY2009 Q1FY2008 Description % Change Amount S$/Ton Amount S$/Ton Volume 207,733 188,676 10.1 (metric tons) Revenue 369,592 1,779 317,552 1,683 16.4 (S$’000) Net Contribution 21,120 102 17,919 95 17.9 (S$’000) 27 Q1 FY2009 Results Briefing 27
Slide 28: Well Diversified Sourcing: Origins
Well Diversified Sourcing : Origins Americas Africa Americas 16.3% 25.8% Africa Europe Europe 12.2% Asia & Middle East Asia & Middle East 45.7% Sourcing Volume Sourcing Volume Q1FY2009 Q1FY2008 28 Q1 FY2009 Results Briefing 28
Slide 29: Well Diversified Sales: Markets
Well Diversified Sales : Markets Americas Africa Americas Africa Europe Europe Asia & Middle East Asia & Middle East Sales Turnover Sales Turnover Q1FY2009 Q1FY2008 29 Q1 FY2009 Results Briefing 29
Slide 30: Well Diversified: Customers
Well Diversified : Customers Segment Top 5 Customer Share of Total Sales Edible Nuts, Spices & Beans 2.7% Confectionery & Beverage Ingredients 7.9% Food Staples & Packaged Foods 2.2% Fibre & Wood Products 1.7% Total number of customers in Q1FY2009 is over 6,500 30 Q1 FY2009 Results Briefing 30
Slide 31: Results: Q1 FY2009 Balance Sheet Analysis
Results : Q1FY2009 Balance Sheet Analysis 31
Slide 32: Balance Sheet Analysis: Summary
Balance Sheet Analysis : Summary (Figures in S$’000) Q1FY2009 Q1FY2008 % Change G d ill and Goodwill d Intangibles I t ibl 133 558 133,558 130 259 130,259 25 2.5 Fixed Assets & Investments 679,134 429,459 58.1 Other Non-Current Assets 53,279 61,117 (12.8) Current Assets Debtors 576,400 724,352 (20.4
Slide 33: Fixed Investments
Fi d Investments Fixed I t t (in S$ million) Q1FY2009 FY2008 Increase Fixed Assets 408.1 403.4 4.7 Investments 271.0 26.0 245 Goodwill & Intangibles 133.5 130.3 3.2 Total 812.6 559.7 252.9 Fixed Investments 18 4% 18.4% 12 7% 12.7% / Total Assets Ratio 33 Q1 FY2009 Results Briefing 33
Slide 34: Balance Sheet Analysis: Ratios
Balance Sheet Analysis : Ratios Q1FY2009 June 2008 Change Q1 FY2008 Debtors (days) 31 33 (2) 26 Stock ((days) y ) 95 88 7 99 Advance to 22 19 3 22 Suppliers (days) Trade T d Creditors C di (27) (26) (1) (22) (days) Cash to cash cycle 121 114 7 125 Current Ratio(x) 1.66 1.26 0.40 1.39 34 Q1 FY2009 Re
Slide 35: Balance Sheet Analysis: Debtors
Balance Sheet Analysis: Debtors 76.2% 76 2% off Debtors D bt secured d by b Letter L tt off Credit C dit / Documents of title compared to previous corresponding quarter of 67 67.4% 4% 35 Q1 FY2009 Results Briefing 35
Slide 36: Balance Sheet Analysis: Stock
Balance Sheet Analysis : Stock Increase / ( S$ million)) (in Q Q1FY2009 FY2008 (Decrease) Edible Nuts, Spices & Beans 241.0 275.9 (34.9) Confectionery & Beverage 694.1 774.1 (80) Ingredients Food Staples & Packaged 374.5 410.3 (35.8) Foods Fibre & Wood Products 296.9 329.9 (33) Total , 1,606.5 1,790
Slide 37: Balance Sheet Analysis: Stock
Balance Sheet Analysis: Stock Amount % Total Hedged Position 976 9 976.9 68 2 68.2 Total Sold Forward 454.5 31.8 Sub-Total 1,431.4 89.1 Total Unsold Forward 175.1 10.9 Total 1,606.5 100.0 37 Q1 FY2009 Results Briefing 37
Slide 38: Balance Sheet Analysis: Cash & Borrowings
Balance Sheet Analysis: Cash & Borrowings Only 51.0% of our total credit facilities were used as of 30th September. % Increase/ (in US$ million) Q1FY2009 FY2008 Increase/ (Decrease) (D ) (Decrease) Short Term Banking Facilities 2,752 2,604 148 5.7 MTN / Medium Term Loan 287 310 (23) (7.4) Long Term
Slide 39: Export Incentives
Export Incentives Several countries in which we operate across Asia (eg. India), South America (eg. Brazil, Argentina), Europe (eg. Poland, Netherlands) & Africa (eg. (eg Nigeria, Nigeria Cote d’Ivoire) d Ivoire) provide export incentives. These export incentives are given by the Governments in thes
Slide 40: Export incentives receivables: Status
Export incentives receivables: Status (in S$’ mil) O Opening i Balance B l 119 70 119.70 Export Incentives booked in Q1 FY2009 3.47 Export Incentives received in Q1 FY2009 (32.48) Closing Balance 90.69 40 Q1 FY2009 Results Briefing 40
Slide 41: Bank Facilities & Utilisation
Bank Facilities & Utilisation Amount % Share Limits % Utilised Sh t Term Short T F iliti Facilities 1 244 8 1,244.8 44 6 44.6 3 926 4 3,926.4 31 7 31.7 Long Term Facilities 1 543 2 1,543.2 55 4 55.4 1 543 2 1,543.2 100 0 100.0 Total Borrowings 2,788.0 100.0 5,469.6 51.0 41 Q1 FY2009 Results Briefing
Slide 42: Balance Sheet Analysis: Gearing
Balance Sheet Analysis: y Gearing g Q1FY 2009 FY 2008 Change Before Vis-à-vis Before Fair After Fair After Fair Fair Value before Fair Leverage (x) Value Adj. Value Adj. Adj. Value Adj. Value Adj. Reserve Reserve Reserve Reserve Reserve Gross Debt to Equity (x) 3.20 3.35 3.58 5.87 (0.38) Net Debt to
Slide 43: Balance Sheet: Analysis of Gearing
Balance Sheet : Analysis of Gearing Adjusting : hedged, liquid inventory Net Debt/Equity (x) (3.17x) 2.71x -1431 0.56x (0.74x) -439 439 43 Q1 FY2009 Results Briefing 43
Slide 44: Impact of FRS 39
Impact of FRS 39 Impact on P&L - loss of S$3.2 million. Reduction in equity as of 30 September 2008 is S$39.5 million. FRS 39 allows for hedge accounting to be applied when strict effectiveness criteria are met. We have assessed the effectiveness of our hedging instruments and have concluded that th
Slide 45: Summary
Summary S g top Strong p line ((volume)) and bottom line ((PAT)) g growth at 20.1% and 62.0% respectively for Q1FY2009. EPS grown to 0.87 cents from 0.59 cents (47.5% growth). Total equity grown to S$1.0 billion. Strong cashflow from operations of S$529.1 million. 45 Q1 FY2009 Results Briefing 45
Slide 46: Key Issues & Summary
Key Issues & Summary 46 Q1 FY2009 Results Briefing 46
Slide 47: Other Key Issues
Other Key Issues Global economic slowdown: Impact on demand & Olam’s volume growth prospects: FY2009 Declining commodity prices: Impact on margins & market risk Declining commodity prices: Impact on counterparty & credit risk Global Credit Crisis: Impact on credit risk (advances & debtors) 47 Q1 FY2
Slide 48: Other Key Issues
Other Key Issues Availability of credit Higher borrowing costs: Impact on margins Revised gearing targets M&A and capex Earnings guidance: FY2009 Delivering the Olam Model 48 Q1 FY2009 Results Briefing 48
Slide 49: Global economic slowdown: Impact on demand
Global Gl b l economic i slowdown: l d Impact on demand 49 Q1 FY2009 Results Briefing 49
Slide 50: Global Economic Slowdown: Commodity Asset Class Performance
Global Economic Slowdown: Commodity Asset Class Performance Global credit crisis & concurrent global slowdown has resulted in a steep commodity price selloff. Commodity Index QTD YTD (31.10.2008) S& GSCI S&P GSC -27.8% 8% -26.3% 6 3% DJ AIG -21.3% -28.6% CRB -22.3% -25.2% Commodity Sub Index QTD YTD
Slide 51: Global Economic Slowdown: Agri Commodity Performance
Global Economic Slowdown: A i Commodity Agri C di Asset A Cl Class Performance P f YTD S b IIndex Sub d QTD (31.10.2008) Corn -17.6% -11.9% Wheat -21.1% -39.4% Soybeans Soybea s -11.5% 5% -22.8% 8% Cotton -20.2% -34.9% Sugar -2.8% 2.8% 11.1% Coffee -13.4% -17.0% Cocoa -19 7% -19.7% -0 9% -0.9% 51 Q1
Slide 52: Commodity Prices: Olam basket
Commodity Prices: Olam basket Published Indices 1 Jul 2008 31 Oct 2008 Return S & P GS Agriculture 960.05 574.37 -40.2% CRB CMDT Index 476.69 342.56 -28.1% CRY Index 462.74 268.39 -42.0% Olam Basket -26.7% Olam Basket Rice 862 625 -27.5% Sugar 377 2 377.2 342 2 342.2 -9.3% 9 3% Cocoa 1,705 1,331 -21
Slide 53: Commodity Selloff: Liquidation by funds
Commodity Selloff: Liquidation by funds The peak of speculative length occurred in March with liquidation well under way by the time the DJAIG Index peaked in July. 53 Q1 FY2009 Results Briefing 53
Slide 54: Global Economic Slowdown: Equity Asset Class Performance
Global Economic Slowdown: Equity Asset Class Performance Global de-leveraging impacting simultaneous selloff across asset classes, including commodities. Equity Index QTD YTD (31.10.2008) S&P 500 -16.9% -34% FTSE I00 -10.7% -32.2% MSCI World -19.0% -39.8% 54 Q1 FY2009 Results Briefing 54
Slide 55: FY2008: Milestone Year
FY2008: Milestone Year Tandem/concurrent movements across asset classes & within asset classes have sent correlation markedly higher. 55 Q1 FY2009 Results Briefing 55
Slide 56: However, secular commodity trend still intact
However, secular commodity trend still intact … FY2008: Milestone Year 56 Q1 FY2009 Results Briefing 56
Slide 57: Global slowdown: Impact on demand
Global slowdown: Impact p on demand Olam’s portfolio mainly comprises primary agricultural products where demand is mostly neutral to economic conditions. 17 out of the 20 products in our portfolio are food raw materials where demand is reasonably recession proof while 3 products (cotton, wood produ
Slide 58: Impact on demand - Wood Products
Global slowdown: Impact on demand - Wood Products Olam’s Olam s wood products business consists of two categories: a) Teak and b) Tropical hardwoods. E dC End Customers t mainly i l iin construction t ti & ffurniture it iindustry. d t Demand is affected by slowdown in India, China, Vietnam and Europ
Slide 59: Impact on demand - Cotton
Global slowdown: Impact on demand - Cotton Cotton demand outlook (source: ICAC Nov 08 report) World imports forecast to decrease by 6% to 7.8m tonnes. Key importing country China, is expected to import 10% less (estimated 2.3m tonnes against 2.5m tonnes in 07/08). Global mill use expected to decline
Slide 60: Global agri-commodities: 5.2B MT market
Global agri-commodities: a5 5.2B 2B MT market in total production Production (2006, M tonnes) Production Volume Shea Pecans Cocoa Macadamia Oats Wool Citrus Total: 5.2B MT Linseed Pistachios Mill t Millet R bb Rubber S Sesame Ginger Ha eln ts Hazelnuts 2,182 Cotton 1,439 1,003 271 111 69 65 48 39 10
Slide 61: Olam's participation: ~20% of addressable traded volume
Olam’s participation: ~20% 20% of the total addressable traded volume Olam mkt share >10% Olam mkt share bet. 5-10% Olam mkt share <5% Total: Volumes sourced ((M MT)) Millet Traded Volume Nutmeg 732M MT Oats244 Wool 162 147 82 67 10 9 6 5 100% Eggs Others Sorghum Rubber Others Citrus Pepper Walnuts
Slide 62: Market Share Growth
Market Share Growth FY 2008 FY 2007 FY 2006 FY 2005 Segment : Edible Nuts, Spices & Beans Cashew 16.6% 14.4% 13.5% 11.7% Peanuts 7.8% 3.0% 2.5% 1.8% Sesame 13.7% 13.4% 9.4% 7.7% g Segment : Confectionery y & Beverage g Ingredients g Cocoa 17.1% 15.5% 13.8% 11.2% Coffee 7.1% 4.5% 3.8% 3.0% Segment :
Slide 63: Olam's Volume Growth Prospects: FY2009
Olam’s Volume Growth Prospects: p FY2009 Volume growth for the last 2 three year cycles (past 6 years) is 19.1% CAGR. FY2008 actual t l volume: l 4.926m 4 926 ttonnes (growth ( th +30.6%). +30 6%) Q1 FY2009 volume growth is 20.1%. Sources of growth for Olam are a) market demand growth; b) market sha
Slide 64: Olam's Volume Growth Prospects: FY2009
Olam’s Volume Growth Prospects: FY2009 Target volume growth in FY2009: 0.887m tonnes (assuming 18% mid-point of 16-20% CAGR target growth). th) New businesses volume growth (acquisitions + new products like wheat wheat, barley barley, canola & wool) is expected to be 0.5 million tonnes (contributing
Slide 65: Declining commodity prices: Impact on margins & market risk
Declining commodity prices: Impact on margins & market risk 65 Q1 FY2009 Results Briefing 65
Slide 66: Impact on margins & market risk exposure
Declining commodity prices: Impact on margins & market risk exposure Our nature of participation in this industry is as a supply chain manager manager. Olam is not a positional, directional, positional directional proprietary or speculative commodity trader. Headline commodity prices have therefore
Slide 67: Earnings Growth Despite Volatile Prices
Earnings Growth Despite Volatile Prices US$ Price NC/Ton 3 500 3,500 120 3,000 100 2,500 80 2,000 60 1,500 40 1,000 20 500 0 0 2003 2004 2005 2006 2007 2008 NC/Ton COCOA COFFEE COTTON CASHEW SUGAR RICE SESAME 67 Q1 FY2009 Results Briefing 67
Slide 68: Consistent NC/ton Growth
Consistent NC/ton Growth through: value added,, customised solutions & services NC/Ton (S$) 120 102 100 93 82 80 76 69 60 45 40 20 0 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 Q1 FY2009 NC/Ton is S$106/Ton, S$106/Ton 10% growth from S$96/ton in Q1 FY2008. 68 Q1 FY2009 Results Briefing 68
Slide 69: Consistent Segmental NC/ton Growth
Consistent Segmental NC/ton Growth through: value added, added customised solutions & services Edible Nuts, Spices & Beans Q1 FY2009 Q1 FY2008 % Change NC/ton 122 113 8.1 Confectionery & Beverage Ingredients NC/ton 148 133 10.8 Food Staples & Packaged Foods NC/ton 78 69 11.8 Fibre & Wood Products NC
Slide 70: Consistent Segmental NC/ton Growth
Consistent Segmental NC/ton Growth through: value added, added customised solutions & services Edible Nuts, Spices & Beans FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 NC/ton 106 87 97 114 110 121 151 Confectionery & Beverage Ingredients NC/ton 100 73 118 124 130 149 135 Food Staples & Packaged
Slide 71: Declining commodity prices: Impact on Market Risk
Declining commodity prices: Impact on Market Risk Amount % T t l Hedged Total H d dP Position iti 976 9 976.9 68 2 68.2 Total Sold Forward 454.53 31.8 Sub-Total 1,431.43 89.1 Total Unsold Forward 175.12 10.9 Total 1,606.55 100.0 71 Q1 FY2009 Results Briefing 71
Slide 72: Impact on Market Risk: VaR
Declining g commodity y prices: p Impact on Market Risk (V R based (VaR b d on 1 1-day, d 95%) ( att 30th S (as Septt 2008) VaR Category (in US$ million) Futures Traded Products 1.23 m Non Futures Traded Products 1.66 m Total Portfolio 2.89 m Average holding period of positions was 11 days in Q1 FY2
Slide 73: Declining commodity prices: Impact on counterparty & credit risk
Declining commodity prices: Impact on counterparty & credit risk 73 Q1 FY2009 Results Briefing 73
Slide 74: Counterparty Analysis: forward sales book
Counterparty Analysis: forward sales book Average Party Amount No of Parties No. Value % Share Tenor (S$m) $ (S$m) A1 & A2 Counterparties 59 3.25 191.9 42.2 Up to 2 years From 6 B1 & B2 p Counterparties 147 1.05 154.4 34.0 months to 1 year C1 & C2 Spot to 3 Counterparties 166 0.65 108.3 23.8 months
Slide 75: Counterparty Risk Management
Counterparty Risk Management W ll diversified, Well di ifi d 6,500 6 500 customers t 200 000 suppliers & 200,000 li 98% of sales made directly to end-users, no second hand a d ttrade ade witht ot other e bbrokers, o e s, dea dealers eso or merchants e c a ts Predominant spot purchases eliminates sup
Slide 76: Counterparty Analysis
Counterparty p y Analysis y 70-80% of our volumes are through containers; the balance ( i l rice (mainly i and d sugar)) are shipped hi d iin h handy-size d i vessels l Goods in containers can be held at port for 10-15 days before demurrage is incurred Demurrage for containers are significantly lowe
Slide 77: Credit Risk Analysis: Bad Debt Provision
Credit Risk Analysis: Bad Debt Provision Bad B d Debt D bt writeoff it ff Year carried forward (in S$’000) (in S$’000) FY2005 51 5,869 FY2006 196 9,402 FY2007 551 9,604 FY2008 1,196 6,724 No further provision was made in Q1 FY2009. 77 Q1 FY2009 Results Briefing 77
Slide 78: Counterparty & Credit Risk Analysis: Market-wise
Counterparty p y & Credit Risk Analysis: y Market-wise Average Total Sales % Share Region Invoice Value (in S$’m) of Sales (in S$’000) Africa 368 21.5% 116 Asia & Oceania 594 34.7% 218 Europe 401 23.4% 153 Americas 350 20.4% 141 Total / Average 1,713 100.0% 156 78 Q1 FY2009 Results Briefing 78
Slide 79: Counterparty Analysis
Counterparty Analysis Limited credit risk: Sales into Americas and Europe are transacted in cash against i t documents d t sentt direct di t tot customers t (mainly ( i l A1-A2) A1 A2) Sales into Asia and Middle East are through LCs or cash- against-documents through banks (mainly B1-B2) Sales into
Slide 80: Global Credit Crisis: Availability of Credit
Global Gl b l Credit C dit Crisis: Ci i Availability of Credit 80 Q1 FY2009 Results Briefing 80
Slide 81: Availability of Credit
Availability of Credit: Only 51.0% of our total credit facilities were used as of 30th September. September % Increase/ (in US$ million) Q1FY2009 FY2008 Increase/ (Decrease) (D ) (Decrease) Short Term Banking Facilities 2,752 2,604 148 5.7 MTN / Medium Term Loan 287 310 (23) (7.4) Long Term Loan 795
Slide 82: Bank Facilities & Utilisation
Bank Facilities & Utilisation Amount % Share Limits % Utilised Sh t Term Short T F iliti Facilities 1 244 8 1,244.8 44 6 44.6 3 926 4 3,926.4 31 7 31.7 Long Term Facilities 1 543 2 1,543.2 55 4 55.4 1 543 2 1,543.2 100 0 100.0 Total Borrowings 2,788.0 100.0 5,469.6 51.0 82 Q1 FY2009 Results Briefing
Slide 83: Availability of Credit
Availability of Credit Current lines are adequate to support growth in FY2009 with significant margin of safety Prices of commodities in our portfolio has declined by 26% YTD We currently have S$2.3 billion of facilities that are committed, i d accounting i ffor 88% off d debt b required i d at curr
Slide 84: Availability of Credit
Availability of Credit 7 banks contribute to about 60% of short term loans These banks are relatively less affected by the current financial crisis All short term facilities renewed for the year 84 Q1 FY2009 Results Briefing 84
Slide 85: Limited Refinancing Risk
Limited Refinancing Risk Year Loans for Repayment FY 2010 US$200 m S$272.0 m FY 2011 US$354 m S$495.0 m No refinancing requirement in FY2009. 85 Q1 FY2009 Results Briefing 85
Slide 86: Impact of higher borrowing cost
Impact of higher borrowing cost Interest rate fixed for medium & long term loans at 4.30% I t Interest t on short h t term t loans l increased i d on an average by b 80 bps compared to FY08 Market is offering carry and short term interest cost is being gppassed through g and will not impact p earnin
Slide 87: Revised Gearing Targets
R i d Gearing Revised G i Targets T t 87 Q1 FY2009 Results Briefing 87
Slide 88: Gearing
Gearing Net Debt:Equity Net Debt:Equity Revised target Previous target Short term assets 2.5x - 3.5x 4.0x - 5.0x (inventories & receivables) Capex and M&A 1.5 : 1 2:1 Adjusted gearing (Net of liquid hedged 0 5x – 1.0x 0.5x 1 0x 1 0x - 2.0 1.0x 20x inventories & receivables) Our current bank covenant
Slide 89: M&A and Capex
M&A and dCCapex 89 Q1 FY2009 Results Briefing 89
Slide 90: M&A: Lifting Portfolio Equity and Capital Spreads
M & A: Lifting Portfolio Equity and Capital Spreads No. of deals announced : 10 Total Investments : US$623.7m (S$857.5m) FY11 Target FY14 Target Net Earnings Accretion S$98m S$153m ROE of Acquisitions 34% 54% Impact on Portfolio Equity 15% (+4%) 23% (+12%) Spread (ROE – Ke) ROIC of Acquisitions 15%
Slide 91: M&A and Capex
M&A and Capex The company has decided to be more cautious in looking at further acquisitions in the current credit crisis. We will therefore be putting on hold further M&A activity till the credit markets stabilise and capital availability improves. Similarly, the company has also decided to be more
Slide 92: Guidance: FY2009
G id Guidance: FY2009 92 Q1 FY2009 Results Briefing 92
Slide 93: Guidance: FY2009
Guidance: FY2009 The Group continues to execute on its growth strategies by concurrently increasing its sourcing volumes in existing and new origins for existing and new products while continuing to broaden its customer base and undertake margin enhancement initiatives in selected products and geogr
Slide 94: Guidance: FY2009 (con't)
Guidance: FY2009 (con’t) Of the 20 products in its portfolio, 17 are primary food raw materials and demand for these products is reasonably resilient to recessionary conditions. The remaining three industrial raw material products are expected to face more headwinds and are expected to suffer declin
Slide 95: Delivering the Olam Model
D li i the Delivering th Olam Ol Model M d l 95 95 Q1 FY2009 Results Briefing
Slide 96: The Olam model: 10 building blocks
The Olam model, the way we do business, has helped us achieve consistent business results over the last 19 years across commodity cycles and economic cycles. The Olam model is centered around these 10 building blocks. MAXIMISE fundamental Intrinsic shareholder value over time for our continuing shar
Slide 97: Building long term intrinsic shareholder value
Building long term intrinsic shareholder value Our Governing Objective/Core Purpose/Mission DRIVERS “To maximise intrinsic shareholder value over time for our continuing shareholders” Open up the Equity Spread (ROE-KE) Increase the Rate of Profitable growth Sustain this growth over a period of time
Slide 98: eer e Ses. RP Re Baie Rane,
eer e Ses. RP Re Baie Rane, STO es sarees eee eA wae eee a MAXIMISE fundamental Intrinsic shareholder value over time for our continuing shareholders
Slide 99: Sst AVE SESS Roe Sie Se,
Sst AVE SESS Roe Sie Se, Sh i Oe ree ¢ ito d providing differentiated marketing solutions and services helping us grow at above market Naas MAXIMISE fundamental Intrinsic shareholder value over time for our continuing shareholders » ae Ei “eae Roce Ss = nee
Slide 100: msde ea ie Soe ns esis,
= ch 3 msde ea ie Soe ns esis, Sache Sieh nb a Roam ule Laue Gl ely 3 ‘ 2 Pot ; : ho Aha ioe Ta Se om Da SST, aD ee ARISES eg i fio ty ye” NTI OE PE ek SRE I aca MAXIMISE fundamental Intrinsic shareholder value over time for our continulng shareholders
Slide 101: Thank You
Thank You 101 Q1 FY2009 Results Briefing 101