Olam International Limited

9M 2015 Results Briefing

November 13, 2015 I Singapore

Notice

This presentation should be read in conjunction with Olam

International

Limiteds

Quarter

and

15

Months

ended

September 30, 2015 (Q3 2015 & 15M FY2015 respectively)

Financial Results statement and Managements Discussion
and Analysis lodged on SGXNET on November 13, 2015

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 managements assumptions about future
developments.
Such forward looking statements are intended to be identified by words such as
believe, estimate, intend, may, will, expect, and project and similar
expressions as they relate to the Group. Forward-looking statements involve
certain risks and uncertainties because they relate to future events. Actual results
may vary materially from those targeted, expected or projected due to several
factors.
Potential risks and uncertainties includes such factors as general economic
conditions, foreign exchange fluctuations, interest rate changes, commodity price
fluctuations and regulatory developments. Such factors that may affect Olams
future financial results are detailed in our listing prospectus, listed in this
presentation, or discussed in todays press release and in the management
discussion and analysis section of the companys Quarter and 15 Months Ended
September 30, 2015 results report and filings with SGX. The reader and/or
listener is cautioned to not unduly rely on these forward-looking statements. We
do not undertake any duty to publish any update or revision of any forward
looking statements.
3

Change in Fiscal Year

The Company had announced a fiscal year-end change from June

30 to December 31
With this change, the Companys current fiscal year, which began
on July 1, 2014 will end on December 31, 2015. Thereafter, the
Company will follow a January to December fiscal year
The numbers presented and analysed in this presentation are for
the nine months ended September 30, 2015 on the new fiscal
year basis (January 1, 2015 to December 31, 2015) referred to
as 9M 2015 and are compared to the prior corresponding nine
months ended September 30, 2014 (9M 2014)

Agenda

Highlights 9M 2015
Financial Performance
Key Takeaways

Highlights 9M 2015
Olams palm nursery in Gabon

Highlights 9M 2015

P&L highlights
Strong growth in Operational PATMI; up 41.0% to S$258.0 mn

Marginal decline of 1.6% in EBITDA to S$809.8 mn with growth in

most segments, offset primarily by underperformance in Food Staples &
Packaged Foods segment
Reported PATMI was lower by 66.8% to S$157.0 mn on account of
exceptional items (as highlighted in prior quarters)

Balance sheet and cash flow

Generated positive free cash flow to firm of S$5.8 mn after the
acquisition of MMI for S$234.7 mn (9M 2014: S$198.9 mn)

Reduced net gearing to 1.43x at September 30, 2015; remains well

in line with our 2016 objective of at or below 2.0x

Highlights 9M 2015
Strategic partnership with Mitsubishi Corporation (MC)
Raised ~S$915.0 mn of growth capital by issuing 332.73 mn shares
to MC at S$2.75 per share (~29.3% premium to 12-month VWAP)
Post completion of the share issuance and secondary share purchase
from the KC Group, MC has become Olams second largest shareholder
with a 20.0% shareholding

Financing
Continued reduction in net finance costs (excluding one time costs):
S$327.6 mn in 9M 2015 (9M 2014: S$369.7 mn)

Progress on strategic initiatives

Completed the acquisition of ADM Cocoa at an EV of US$1,204.0 mn.
Olam Cocoa is now a top 3 integrated supplier of cocoa beans and
products globally.
The integration of MMI was completed during the period and the
business is performing ahead of plan
8

Financial Performance

Onion harvesting in USA

P&L Analysis
SGD Mn

9M 2015
Volume ('000 MT)

9M 2014

% Change

Q3 2015

Q3 2014

% Change

8,814.3

10,650.5

(17.2)

3,227.7

3,134.2

3.0

Revenue

13,604.2

14,892.7

(8.7)

4,471.5

4,298.6

4.0

EBITDA

809.8

823.4

(1.6)

194.6

219.4

(11.3)

PAT

142.9

509.7

(72.0)

24.5

41.9

(41.6)

PATMI

157.0

472.3

(66.8)

31.0

44.3

(30.0)

Operational PATMI

258.0

183.0

41.0

34.2

32.2

6.2

Operational PATMI up 41.0% while Reported PATMI declined by 66.8% due to

exceptional items

Decline in overall sales volume mainly due to discontinued / restructured lower

margin businesses

EBITDA decline of 1.6% to S$809.8 mn for 9M 2015

9M 2015 recorded a higher net operational loss on fair valuation of biological

assets of S$31.5 mn compared to a net operational loss of S$7.5 mn in 9M 2014

Lower net finance costs, depreciation & amortisation and minority interest with
higher taxation as compared to 9M 2014
10

Historical EBITDA and Invested Capital

EBITDA

SGD Mn

14,000

1,400

1,199.9
1,200

Invested Capital

SGD Mn

12,000

1,106.6

1,062.9

12,828.1
11,412.2

11,556.8

11,647.5

5,840.2

6,017.2

6,116.6

4,663.4

5,572.0

5,539.5

5,530.8

5,794.5

Dec'12

Dec'13

Dec'14

Sep'14

Sep'15

10,865.6

10,000

1,000

823.4

809.8

800

8,000

600

6,000

400

4,000

200

2,000

6,202.2

7,033.6

2012

2013

2014

9M 2014

9M 2015

Fixed Capital

Working Capital

As compared to Sep 14: Increase in fixed capital from the acquisition of MMI
and increase in working capital due to increased inventories and receivables
and the translational impact of currency devaluation
IC excludes
(a) Gabon Fertiliser Project (30-Sep-15: S$195.1 million, 31-Dec-14: S$182.4 million, 30-Sep-14: S$179.0 million), and
(b) Long Term Investment (30-Sep-15: S$291.0 million, 31-Dec-14: S$334.4 million, 30-Sep-14: S$394.3 million)

11

Segmental Analysis

Wheat milling in Ghana

12

Edible Nuts, Spices & Vegetable Ingredients

EBITDA

SGD Mn

400
350

346.7

Invested Capital

SGD Mn

4,000
335.5

308.5

299.3

300

3,500

3,610.0

3,356.6

3,049.2

3,613.0
3,173.7

3,000

265.0

250

2,500

200

2,000

150

1,500

100

1,000

50

1,850.4
1,391.8

1,587.1

1,657.4

1,759.6

1,769.5

1,601.7

1,808.5

Dec'12

Dec'13

Dec'14

Sep'14

Sep'15

500

1,804.5
1,572.0

2012

2013

2014

9M 2014

9M 2015

Fixed Capital

Working Capital

The almonds business continued its strong performance, aided by record prices & A$
depreciation. Hazelnuts, cashews and the SVI business in the US performed well. MMI
contributed incremental EBITDA, partially offset by underperformance in the Argentinean
Peanut business
Invested capital increased by S$439.3 mn as compared to end-Sep 2014 due to the
acquisition of MMI, investment in increased acreage of almond and pistachio plantations in
the US and higher inventories of almonds, cashews and hazelnuts due to increased prices
13

Confectionery & Beverage Ingredients

EBITDA

SGD Mn

350

4,000

322.6

300

Invested Capital

SGD Mn

268.5

3,683.4

3,500

278.3

185.1

200

197.9

2,745.4

2,737.0

150

2,346.6

2,500
2,000

1,913.9

1,500

100

1,000

50

500

2013

3,238.6

3,000

250

2012

3,249.6

2014

9M 2014 9M 2015

3,149.6

1,855.4
1,615.4
298.5

491.2

504.2

501.6

533.8

Dec'12

Dec'13

Dec'14

Sep'14

Sep'15

Fixed Capital

Working Capital

EBITDA growth of 6.9% with good contributions from both Coffee and Cocoa
platforms. The soluble coffee facility in Vietnam performed well during this period
Invested capital in the segment increased by S$444.8 mn as compared to end-Sep
2014 mainly due to an increase in Cocoa inventory levels which were carried at
higher average prices
14

Food Staples & Packaged Foods

EBITDA

SGD Mn

378.2

400

4,000

3,691.3

3,612.8
3,075.4

3,157.3

3,345.5

708.7

736.0

897.9

2,524.6

2,366.7

2,421.3

2,447.6

Dec'13

Dec'14

Sep'14

Sep'15

3,500

350
300

Invested Capital

SGD Mn

296.0

295.2

250

3,000
2,500

224.9

200

164.0

2,000

150

1,500

100

1,000

50

500

2012

2013

2014

1,088.2

1,670.9

9M 2014 9M 2015

2,020.3

Dec'12

Fixed Capital

Working Capital

The Grains and Rice businesses performed well during this period
Segment EBITDA declined by 27.1% due to reduced volumes from discontinued operations, continued
underperformance of Dairy farming operations in Uruguay, lower contribution from sugar trading, adverse
impact of low palm prices on SIFCA and the impact of currency devaluation on PFB in Nigeria and Palm refining
in Mozambique
As highlighted in Q2 2015, the Dairy farming operation in Uruguay will be restructured on account of its
continued underperformance. The restructuring is likely to result in a one-time cost in Q4 2015
Invested capital increased by S$188.2 mn vis--vis end-Sep 2014, due to increased working capital in Grains
milling, Packaged Foods and Palm businesses and higher fixed investments in Palm plantations in Gabon

15

Industrial Raw Materials

EBITDA

SGD Mn

2,500

250

218.6

Invested Capital

SGD Mn

215.6

2,193.9

2,121.6

1,067.1

1,118.3

1,839.4

1,872.0

1,043.6

974.2

686.2

795.8

897.8

1,005.1

1,003.3

Dec'12

Dec'13

Dec'14

Sep'14

Sep'15

2,000

200

2,072.2

160.7
150

143.5

129.6

1,500

100

1,000

50

500

2012

2013

2014

9M 2014 9M 2015

1,507.7

Fixed Capital

Working Capital

The Cotton and Wood Products businesses recorded a growth in EBITDA

Overall segment EBITDA declined by 19.4% due to a reduced contribution from the SEZ
business as compared to the prior corresponding period
Invested capital increased by S$49.4 mn compared to end-Sep 2014 with higher
Cotton inventories and investments in upstream Rubber plantations, partly offset by a
reduction in our net investment in SEZ
16

Cash Flow, Gearing & Liquidity

Irrigation at our coffee farms in Zambia

17

Continued free cash flow generation

SGD Mn

Cash Flow Summary

9M 2015

9M 2014

Operating Cash flow (before Interest & Tax)

849.8

829.8

20.0

Changes in Working Capital

(527.4)

(486.7)

(40.7)

Net Operating Cash Flow

322.4

343.1

(20.7)

Tax paid

(53.1)

(45.1)

(8.0)

(263.5)

(99.1)

(164.4)

5.8

198.9

(193.1)

Net interest paid

(362.3)

(330.3)

(32.0)

Free cash flow to equity (FCFE)

(356.5)

(131.4)

(225.1)

Capex/ Investments
Free cash flow to firm (FCFF)

Y-o-Y

Generated positive free cash flow to firm of S$5.8 mn in 9M 2015 as

compared to S$198.9 mn in 9M 2014 as higher operating cash flows were
offset by an increase in working capital, tax and net capex due to the
acquisition of MMI

18

Reduced gearing, remains in line with 2016

objective

30-Sep-15
Gross debt

31-Dec-14

Change
vs Dec 14

9,175.7

9,840.7

(665.0)

1,276.0

1,845.8

(569.8)

Net debt
Less: Readily marketable
inventory
Less: Secured receivables

7,899.7

7,994.9

(95.2)

3,854.1

3,947.9

(93.8)

1,525.3

1,030.4

494.9

Adjusted net debt

2,520.3

3,016.6

(496.3)

Equity (before FV adj reserves)

5,509.0

4,320.1

Net debt / Equity (Basic)

1.43

1.85

(0.42)

Net debt / Equity (Adjusted)

0.46

0.70

(0.24)

Less: Cash

1,188.9

*RMI: inventories that are liquid, hedged and/or sold forward

Net gearing of 1.43x at end-Sep 2015 was significantly lower than 1.85
times as at end-Dec 2014, mainly arising from the placement of shares to
Mitsubishi Corporation

The gearing level remains in line with our 2016 objective of at or below
2.0 times
19

Ample liquidity
S$ Mn as on 30 Sep 2015

8,830
9,176
15,485

Short Term
2,398

1,525
Long Term
6,778

3,854
1,276
Cash and short-term
fixed deposits

RMI*

Secured
Receivables

Unutilised bank
lines

Available Liquidity

Total Borrowings

*RMI: inventories that are liquid, hedged and/or sold forward

Available liquidity sufficient to cover all repayment and Capex obligations

Borrowing mix currently weighted towards medium and long term

Continue to optimise debt tenor and cost

20

Key Takeaways
Coffee harvesting in Brazil

21

Key Takeaways
Taken significant steps this quarter toward realising our long term
strategy
With Mitsubishi Corporation as a new long term strategic shareholder,
we are in a much stronger position to accelerate growth in prioritised
platforms
The acquisition of ADM Cocoa makes us one of the top 3 integrated
cocoa beans and products suppliers in the world

Continued improvement in operational performance across most of

our business segments, while we work on restructuring the upstream
Dairy operations in Uruguay
Sustained focus on capital management has helped reduce gearing
and borrowing costs
Remain on track to achieve our strategic plan objectives of profitable
growth and free cash flow generation by 2016
22

Thank You

23

Update on strategic plan execution

SGD Mn

Summary of Completed Strategic Plan Initiatives

Number of
Initiatives

P&L
impact

Closed in 2012
Closed in 2013

1
4

17.4
18.2

Sale and Leaseback of Almond Plantation Assets, Australia

Divestment of Olam Lansing JV, Canada
Sale of Timber Assets, Gabon
Repurchase of Bonds and Perpetual Securities
Sale of 9.8% stake in OCDL, New Zealand
Australian Grains JV with Mitsubishi Corporation
Sale of Timber Subsidiary in Gabon
Sale of Collymongle Cotton Gin, Australia
Sale of 20% stake in SEZ to RoG, Gabon
Sale of Dairy Processing Plant, Cote d'Ivoire
Sale of 10%/20% stake in Palm/Rubber to RoG, Gabon
Sale and Leaseback of Dairy Farm Land, Uruguay
Sale of Australian Wool Business
Closure of SVI dehydrates facility, US

Closed in 2014

65.4
(14.6)
1.0
(0.6)
28.8
(22.6)
6.0

233.2
6.8
22.8
2.3

13.2
31.5
20.4
(2.7)
(4.7)

14

89.6

Sale of 25% stake in Packaged Foods BU to Sanyo Foods

Closed in 2015
Total

Addition
Cash
to capital
flow
reserves impact
68.6
14.2
65.5

1
20

125.2

35.1
79.8
7.5
9.9
74.8
32.7
40.0
70.4

33.8

612.9

106.2

219.1

106.2
154.2

219.1
966.1
24