Olam Group Ltd Basis Eg

Very good morning to all of you, ladies and gentlemen. I'm pleased to see all of you again, this time for the presentation of Olam Group's results for 2024. I'm Hang Hong of Group Investor Relations, and I'm pleased to tell you that we have our senior team with us today. On my right, Group CEO and co-founder, Sunny Verghese. And to his right, CEO of OFI, Olam Food Ingredients, A. Shaker. And on my extreme right, our group CFO, N. Mutukuma. They do not need any further introduction, of course, I think you are all familiar with him. Enough to the cautionary note on forward-looking statements that we'll be giving throughout this presentation. You can read this on your mobile device if you scan the QR code that's provided to you or on the presentation that is downloadable on the webcast. Mutu as Group CFO will provide the context in which our group results were achieved and take us through the group's consolidated P&L, balance sheet and cash flow. Thereafter, the segmentals will be presented by the respective CEOs of the operating groups, Shekhar for OFI and Sunny for Olam Agri and the remaining Olam Group. Then a brief recap of our major reorganisation milestone which we have discussed extensively on Monday. This will be followed by Sunny's thoughts on the business outlook and prospects before he ends with the key takeaways. So thank you for your attention. I'll pause and hand it over to Mutu.

Thank you, Hong Ong. Good morning once again. A warm welcome to the second half and the full year 2024 financial results presentation for the Olam Group. So as this practice, I would like to take the key highlights at a glance for the group. Happy to report that we have almost reached 50 million tons of volumes as a group this year. And also for the first time, we have crossed 50 billion tons. Sing dollars of revenues, even though revenue is not something that we track and report because we do not control commodity prices, but definitely it's a reflection of the size and scale of our business as a group crossing 50 billion Sing dollars. EBIT, which is our key operational metric that we track and report, was up 9% to $1.9 billion, and PATMI stood at $86.4 million, and I will talk about it more primarily on account of significantly higher net finance costs that we incurred during the year because of elevated commodity prices in some commodities of our portfolio, resulting in higher working capital utilization. automatically reflecting higher debt utilization resulting in very high finance costs. So that resulted in a lower conversion of our operational earnings which is EBIT at $1.9 billion down to $86 million. Consequently, our free cash flow to equity was negative $5.9 billion and the gearing went up from 1.73 times to 2.79 times. However, The adjusted gearing, adjusting for readily marketable inventories and secured receivables, stood flat at 0.68 times compared to 0.65 times in 2023, clearly reflecting the liquidity nature of our business. Operational PACME, however, was higher at $216 million compared to the reported PACME of $86 million. Here again, very resilient EBIT growth of 9%. Both the key operating groups, OLAM OFI as well as OLAM Agri, contributing a billion dollars and more each in EBIT contribution and reflecting that in terms of volume growing 12.5%, primarily coming from the OLAM Agri operating group. However, revenue was up by 16.3%, primarily contributed by OFI. And very important to note, and Shekhar will talk about it later in the presentation, OFI delivered a very strong double-digit 29.1% growth on EBIT to 1.07 billion and primarily led by very strong growth in the ingredients and solution segment. Olam Agri achieved also more than a billion dollars of EBIT, 5.8% higher than 2023 EBIT. primarily driven by a very strong growth in the fiber, ag industrials and ag services segment. Here again, no surprises here. Volume, 91% contributed by OLAM Agri, 6.8% by OFI and the balance by the remaining OLAM group. However, in the revenues, as I had indicated earlier, 59% was contributed by OLAM Agri, almost 39% contributed by OFI, supported by very high commodity prices, especially in cocoa, coffee, pepper, and cashews, and that resulted in a very strong EBIT. I talked about it, 53% contributed by OLAM Agri, 55% contributed by OFI, and the balance, a lower contribution from the remaining OLAM group. Invested capital grew by 35% primarily on account of the elevated commodity prices in the OFI portfolio. OFI's invested capital on a year-on-year went up by 47% and as I told earlier, Shekhar will talk about it, and that grew to $26 billion in 2024. Sales volume went up from 44 million tons to almost 50 million tons, primarily contributed by Olam Agri operating group, around 5.5 million tons. Again, here again it is in the food and feed platform and more importantly in the origination and merchandising segment that contributed to bulk of the increase in volumes, especially in grains and edible oil complex. I talked about The EBIT growing from 1.77 billion to 1.93 billion and significant growth, 29% growth year on year EBIT of OFI almost increasing by 240 million and Olam Agri contributing 56 million and the remaining Olam group having a lower EBIT by 134 million resulting in an adjusted EBIT of almost 2 billion dollars for the whole Olam group. I talked about the operation pathway earlier at $216 million, primarily lower in spite of higher EBIT and EBITDA growth because of net finance costs significantly increasing on account of higher utilization of working capital resulting in higher debt and resulting in hence not translating the resilient EBIT growth into bottom line. Clearly, you can see here the growth of 34% on invested capital from $19.75 billion to $26.5 billion, primarily led by working capital utilization, more importantly within the OFI operating group, especially in cocoa, coffee, pepper and cashews, and also in Ola Magri due to year-end higher rice inventory and increasing edible oil prices. As I had indicated, the adjusted net gearing in spite of significant utilization of higher working capital and resulting in higher debt stood almost flat at 0.68 times. And many of you know about the significance of the readily marketable inventories, RMI. However, just for clarification, these are primarily liquid or hedged inventories which can easily be sold down. within a period of 90 days, and almost 75 to 80% of our inventories fall within this category, clearly reflecting the flattish nature of the true gearing for the group, which was very, very comfortably low at 0.68 times. I talked about the free cash flow to almost 5.9 billion negative, primarily led by higher utilization of working capital, resulting in the free cash flow to firms, adjusted for net finance cost at $4.39 billion. In spite of it, very, very comfortable sufficient liquidity with diversified pools of capital, roughly $3.3 billion of cash, $12 billion of readily marketable inventories, $2.8 billion of secured receivables, and almost $7 billion of unutilized bank lines, resulting in a total available liquidity of roughly $25 billion, giving a headroom, a comfortable headroom of $2 billion in spite of very high elevated commodity prices that we saw sustained through 2024, resulting in higher working capital utilization and working for many of our friends here throughout the year and delivering a strong and resilient EBIT and EBITDA growth. And with that, I will hand over to Shekhar to present about Wi-Fi. Thank you.

Thank you, Mutu, and good morning, and let me extend a warm welcome to you again this week in the same location, probably not the same room. When you met at the half-yearly briefing, We were talking about very elevated prices in cocoa. Coffee was just about rearing its head. And we've had a very volatile second half in terms of market prices. And while cocoa and coffee hogs the headlines, but even products like cashew and pepper also had a lot of market volatility. And that's caused a lot of challenges, not just to us, but the whole industry. On the other side, during the same period, what has been very heartening, and that's why I call this challenging yet very optimistic year, because we have, if there was any time in which the resilience of our business model, we didn't need to talk about it at all this year. It came to the fore in terms of what we could do in origin, what we could do in terms of offers to our customers, and supporting, which was, and let me again say, it was challenging, say the least, and continues to be challenging. But the overall capacity of the company, the support of the stakeholders, many of whom are here, and the ability and support of our supplier network as well as our customer network is really what I'd like you to see in the results as we talk through that. So let me start with the challenge. And again, we talked, this is something that many of you are tracking and probably do so even as much as us nowadays. But just a show of hands on how many people know what was the increase in pepper prices this last year? Anyone who knows what happened to the pepper prices? Just hands up. I hope you'll have some questions for me on pepper prices and cashew prices. But cocoa and coffee let me address up front. Then you can ask me what the cashew and pepper prices. Take a look at this chart. We have been in this business for 35 years. We have never seen a year like this. Nobody else in the industry has also seen a year like that. If you take on the left side the cocoa prices, take U.S. or the London market, starting from the free $2,500, hit a peak of $12,000, come down to $6,000, back again somewhere between $8,000 and $9,000 this year. This ends in January, but even the last two months have been equally volatile. Take coffee, if you take Arabicas, started the year last year at $1.60, has gone all the way up to almost $4.40, around $3.65, $3.70 today. What's even fascinating in coffee is the Robusta prices, which were below $2,000, almost touching $6,000, but more importantly, there were times during this year when Robusta was trading higher, physical Robusta was trading higher than Arabica's, which is kind of silly for anybody who drinks coffee or has participated in the coffee industry. So this is, it's been, the word is overplayed, so I don't want to use unprecedented, but it is beyond. anybody's imagination last year as well as even currently so therefore anybody who claims to be able to predict what's going to happen in the next 2 months or 6 months or 12 months at least we would not make that mistake so it is a fairly exaggerated situation it can go either way so this is not about saying it can't go up further or can't go what we know is that There is a fundamental supply-demand aspect to this in each market, which is different. It's not single-size brushes also. Everything is going up or everything is coming down. There are very specific supply aspects. COCO started with a supply deficit at the start of last year, and that became worse through the year. And hence, part of the price and increase is justified because the supply – impact that has happened and that still looks a bit uncertain as we are in this year. So there is clearly a supply-led concern in the cocoa market. Having said that, there is also a lot of speculative money in the market which has also added to the situation on the supply-demand side. And at these prices which have now been there for almost 12 months now, at these elevated levels and unprecedentedly elevated levels, There is certainly demand destruction. There is no one in the industry who has supply cover at the lower prices. And people, everybody from the branded majors to the retailers are calling out some level of demand destruction. Again, nobody knows how much it will be or how long this will be. But there's clearly, while there is a supply deficit which is a real one, there is also a demand adjustment which can more than make up for that supply deficit if these prices continue. So our view is that there could be two bookends. There could be either a very sharp correction exaggerated on the downside as much as it was on the upside or there could be a drifting through the course of this year wherein it stays volatile both sides and any supply led disruption, any further negative news on supply can make these markets again. That's of course nobody knows about that. So we are not trying to manage and just on the coffee, just to kind of close that, is in a similar position today in terms of uncertainty and volatility. But when we started last year, coffee was headed straight for a surplus market. So unlike cocoa, which started the year with a potential deficit, looming deficit, coffee started the year in the first half of the year. Most people, including us, to be honest, believe that the coffee is going to be in a surplus situation through the year. However, there were crop disruptions, especially in the Arabicas, led by Arabicas, but then followed aggressively by Robustas and sometimes even overshooting Arabicas, which led to the situation that we are in, and especially between October and January, the markets really rallied to absolutely crazy levels that we have seen. They've adjusted somewhat, and adjusted when I say somewhat, 80 cents in this market would have been a huge move They have adjusted, but they have also gone up by $2.50. So, therefore, the adjustment is just one-third from where they started last year. Again, in coffee, at this point in time, markets, there was a lot of beyond the fundamentals, a lot of speculative action. And again, this market is poised in a similar way to cocoa. It can supply related concerns, can take this market up, But again, otherwise, if supply-demand kind of forces play through at these price levels, there will be demand destruction and there will be some stability. What we are clear about is probably both cocoa and coffee are not going back to the levels we saw at the start of last year, but they may or may not stay at these levels for the reasons that I mentioned. So it is uncertain, but in a sense, we are not really betting either way on the market going up or going down. as we did not do last year through the year. Our job is really to support the farmer network that we have built over the last 30 years, ensure that we stay and manage how we allocate capital, manage risk, and demand a price for the risk-adjusted return that this business needs in this period of elevated capital and elevated risk. That is really the job we are doing. And that's what hopefully you'll see in the results when you talk about both on the EBIT side in terms of what we are making as well as on the capital side that we are managing significantly better for the two and a half times increase in cocoa and coffee prices and pepper and cashew prices that is not seen in these numbers. You will see that we are managing our capital significantly tighter and allocating it significantly sharper to manage this period. So that is a challenge, but the rest of the presentation I'm going to talk to you about what we believe is also an opportunity which has to be managed cautiously based on these kind of uncertain, unprecedented markets, but also offer an opportunity for our business model, our integrated business model. So taking a look, and I'm going to zoom out a bit and then zoom back into last year. And we have taken, provided a snapshot from 2020, which was the inception, as you know, of our reorganization and inception of O5. In January 2020 is when O5 was born as we reorganized the whole group. So it was a business that was roughly 700 million EBIT that year, and we are ending this almost at a 1.1 billion. Over this period, we have seen COVID, we have seen COVID recovery, we have seen a war, we have seen energy crisis, we have seen inflation, we have seen interest rate hikes, again, fairly unprecedented in a very short period, and we have seen the current price increases and the volatility in these markets. So this business has been truly tested and we believe has demonstrated its capacity to When we announced our mid-term guidance in 21, none of us was aware of what's going to happen in the market. But through this period that none of us anticipated, none of us planned for, this business has delivered a double-digit CAGR. And we had said, guided all of you, that this will be a business that can deliver a high single-digit EBIT CAGR, not based on volume growth, but based on increased EBIT per tonne. So at the bottom you'll see the EBIT per ton, which is an important part, that this business has grown from $200 to $300 a ton. Seems small, but on 4 million tons roughly, that is a significant part of the growth. So we are building this business for participating in volume growth that we want, which is low single digit to mid single digits. but really focused on a high single-digit EBIT growth on a medium-term basis, managing the volatility that will happen and managing, as we have done for the last year, when there is elevated capital, we'll have to seek incremental returns for that elevated capital. So I don't want us to focus only on the 30%. It's easy for me to talk about a 30% growth in EBIT, but I want to really direct us back to... The fact that there's a business being built for delivering a high single-digit EBIT growth on half of that volume, so doubling our margins as we improve returns going forward. And if you see the five-year history, you can see that trend. And now there is a five-year history for OFI on its own, and we have a 35-year history and a proud history at that. But this is the history that I want you to kind of put the current year results in context of. So going to the current year's results, that's a 30% growth in EBIT, but obviously the bigger story here is the elevated capital that we need to look at, where if you look at the bar chart that shows the closing capital, and with a market that's moved like this during the last 24 months, the closing capital is not reflective of the average capital because it's changed through the course of the year. But roughly from $12 billion, we have moved to $17 billion, $5.5 billion increase. It's almost entirely... in inventory and readily marketable inventory. So it's all working capital and almost entirely RMI. So we have to be absolutely clear that this business, and if you look at the revenue of O5, which is there in the other numbers, I didn't talk about this on this chart, but that's a 40% increase in revenue. So the capital has gone into inventory, and the inventory is rotating and will be self-liquidating. Part of it has happened last year. Part of it will happen through the course. It's not all done and dusted all into last year. We are carrying inventory which is hedged and or sold and therefore the risk on that is being managed every day and so therefore all of you should sleep easy just like I do that this is not inventory which can go up and down. We have funded the inventory. We have been very careful about new buying and new selling because that absolutely has to be managed within the capital constraints that we have and the whole industry has. But within that, even though it seems like an increase of $5.5 billion capital, it is very carefully calibrated on 2% volume growth, on a 40% revenue growth, with markets which have gone up 2.5 times. We have an increase in our capital of 5.5 billion on a starting capital of 12 billion. That's, I think, the way the capital should be seen. And we have also been pricing the cost of that capital and the cost of that in the EBIT that we are demanding, and rightfully so, for being able to support our customers. And we are getting that in terms of pricing, some which has flowed in already and some which will flow in through the course of the next year. So, therefore, this is not Therefore, it has to be looked at the incremental EBIT and the incremental capital has to be looked at in relation to the elevated capital and the cost of that, but also in the context of the five-year history wherein we have been doing exactly what we are doing. And if anything, this year has demonstrated our capacity to do more of that with our customers. So moving forward, probably also zoning in on that point I made about capital so that it's crystal clear. We had $12 billion capital to start with. roughly half and half in terms of fixed capital and working capital. Fixed capital has remained more or less at the same level, or very marginal increase. Net of depreciation, we have made some investments, but it's a marginal increase. The entire increase of 5.5 billion is in working capital, and almost entirely in terms of the daily market inventory, so which is the value of inventory lying on our books as of 31st December. Some of it bought inventory that's been sold last year and part of our revenue and some of it which will be sold during the course of this year and will become part of our revenue in 2025. So that is the EBIT and the capital at the overall level. Moving on to the segmental analysis, as I've said many times in the past and as you all who track us know, this business is built on top of a very strong global sourcing strategy. which is our supplier network in all the major producing countries, which has been built over a long 30, 35 years. And that is the foundation on which we are building an ingredient and solution business, whether it's for the private label retailers or for the global brands. So when we look at this business, it's not about increasing volume. It's about providing that stability, the sustainability, the traceability of on the volumes that we have, an increasing amount of sustainable traceable volume that is then manufactured increasingly through our captive processing facilities and delivered to our customers. So when we look at the two segments, it is an integrated business and it is getting even more integrated as we speak. The global sourcing will always remain. Just the volume growth or EBIT growth in the global sourcing is not an indication of the value of the global sourcing segment. It is the base on which the ingredient sourcing is building on top. So it's been stable through this year with a 6% growth on, again, very small volume increase. Has managed capital extremely well, significantly better cycle time. And again, put this into the context of a two and a half times cocoa coffee being 70% of our capital deployed. With that kind of an increase in those prices, the global sourcing has just had a 50% increase in invested capital. So it's managed capital very well, as well as continued to keep our factories running, continued to keep our customers whole, and managed the supplier network. And I can tell you again, it's been very tough. It's been the toughest year to manage and balance all these constituencies and stand by them. And it's been tough for the whole industry. It's been tough for us. So therefore, there's no taking away the fact that that challenge has had its costs. But what we believe we have tried to do is that we try to do it right so that we have a long-term stability of this business protected with our suppliers, with our customers, and obviously with the larger colleagues across the world who have had to manage this volatility daily, every day for the last 12 months and still going on. So it's not been easy, but I want to leave you with the fact that because of the capacity that we have built over the last 30 years, supported by the supplier network, supported by the customer, supported by the stakeholders here who have provided funding with the belief that this is being managed, allocated properly and managed properly for risk and return. That is the reason why we have been able to navigate this and we don't take that lightly. That's an accountability that we deliver. The global sourcing platform is in a very sound place. But on top of that, what is really encouraging is that we have been able to maximize the growth in our ingredient and solutions. When we started the journey five years ago, I didn't point that out, we were roughly a 55% ingredient and a 45% in EBIT terms, global sourcing kind of split. That's gone up to almost 70%, 30%, 70% being ingredient and solution. So the strategy, we have stayed sound to it. Ignore the capital and the noise of the market price and everything else. What we want to communicate is that we are staying absolutely focused on building on top of that global sourcing even better ingredient and solution platform and that is again this year while some of the increased capital and the increased EBIT is there but over a period of time what is important is that we have been growing this business for the EBIT per tonne growing the volumes here significantly more than what we are growing in the global sourcing, and then really going deeper into the chain by way of what we do for private label retailers, for our global brands, what we have done in terms of the whole change in our sustainability impact focus that we announced last year, what we call now as choices for change. So we have been on the sustainability journey for the last 20 years, but we are taking it to the next level. And that's also a solution that we provide very differentially to our customers through our manufacturing, through our innovation, delivering that. We have changed our innovation capacity and invested a lot, and it's still not fully yielding because the investments have been made over the last three years, but we are focused We opened up a new center last year in Chicago. We opened up a front-end innovation center in Shanghai. And today we run with four large global centers in Chicago, Amsterdam, Singapore, and Bangalore with front-end innovation centers in Shanghai, Brazil, Indonesia, etc. All that is huge investments in capability that is still not fully yielded. But we are doing that. It's part of these numbers, but it's still not fully yielding. So we are building this business for the future. In the investments we have made in brick and mortar and the acquisitions that we have discussed with you, we are doing the greenfield investment that we have discussed with you. We are investing in capabilities. We are investing in sustainability. We are investing in digitization. So it is not just about managing... market price or but while we are doing this we are investing in this business for the long term growth, sustained growth in this business. Two points, last point before I kind of hand back is Old Thompson, which was a big investment for us that we made in the middle of 21, and we had discussed that we were running behind thesis in 22 and 23. In 24, it's come back roaring, and we are now back at what we planned for this business. And there was, during the 22 and 23, not that the business was bad or the There was clearly the kind of inflation that we ran into as soon as we acquired that business and the operating aspects of that and the changes that we needed to make to the SKUs and the rationalization of SKUs, the rationalization of customers, pricing, all that took time. So we have gone through that cycle and in 24 and what's more important as we position into 25, that business is striking at full levels. The three greenfield investments that we made in Brazil, coffee, soluble coffee, in New Zealand, dairy, as well as in private table nuts in the U.S. were all fairly sizable investments. All three, again, have been commissioned. There were some delays at the start, but now all three are looking very good in terms of operational parameters, and we feel that that will contribute during 2025 and 2028, getting up to full capacity in these. And these are all put together more than half a billion dollars of greenfield investment. Therefore, it was a sizable investment that we put. So we have been investing behind this business in dollar terms. We have been supporting this business with the capital that is required to extract full value from the working capital and all the changes that have happened and this business has been demonstrating proof of delivery. So the last bit that is there is considering especially that when we started this week we talked to you about the value unlock in Olam Agri. So we are not forgetting about that. We believe that is firstly we have to create value in OFI which we are doing and hopefully I have shown that you in these numbers also but we are also paying attention and not forgetting about the fact that we want to unlock value whether by way of an IPO or by any other strategic option and we will be able to share further news about that as and when that factifies so we are not forgetting that we are not losing sight of that that's happening but as you can imagine these things we can only talk about when it happens Thank you all, and happy to take questions and then heading back to Sunny.

Thank you, Hangul, Shekhar, and Mutu. I have two tasks that are remaining for today's briefing. The first is to do a deep dive into O5, sorry, into OLAM-AGRI, and then to round off with the remaining OLAM group. And then we are happy to take questions from all of you. So first, OLAM-AGRI, if you can, sorry. So first, Olam Meghri. This has been a cyclical downturn year for the sector of our industry. Our peers who have all announced results so far have all had shown significant declines in earnings and prospects. We have seen Cargill, which is private and not a listed company, announce that they are cutting down 7,000 jobs because their profits have fallen significantly. very steeply from the prior year. We've also had the listed companies ADM report results which are 44% lower than the prior year and we have Bungi report results which is 48% lower than the prior year. We've had Wilmar also just report results and they are also down by more than 20% compared to the prior year. So it has been a tough cyclical downturn that the industry had to face. What is different about the Ola and Meghri business, where we have actually stayed flat in terms of bottom line performance, more or less flat, has been the differentiation of this business. So how is this business differentiated? The first thing you can see is from the portfolio shape. So about 80% of this business is unique and different to Ola and Meghri. None of the competitors that I mentioned to you share the same portfolio shape. So, for example, you can see that 20% of our EBIT came from the fiber, agri-industrial, and ag services segment. This is not typically a segment that our peers participate in. Secondly, about 59% of our operating profits come from a processing and value-added segment. The competition that we have spoken about in the geographies that we are doing this your OLAM is fairly unique. So this 80% of the business is quite differentiated. The first category, which is 21% of our business, which is the origination and merchandising segment, is similar to what all our peers are doing, and that there is direct competition and direct OLAM. But even in that origination and merchandising segment, we are clearly differentiated in that our origination and merchandising model is an asset-like model. So we do not really invest in fixed assets in the origination side in the principal producing countries. As a result of not being fixed asset intense in the key producing countries, we do not have the same overhead cost per ton. Our overhead cost per ton is between half a dollar and one dollar per ton. Our competition typically has an overhead cost of $9 and above per ton because they've got all the silos and all the deep infrastructure in the producing countries which provides a significant advantage but has less flexibility in terms of the profit that they will have to make per ton to really amortize the cost of that fixed asset intensity. The second advantage it provides is that we are not seen by the producers in these countries as directly competing with them because we are their customers. So they would like to prefer to sell to us if they have a choice rather than do business with folks who are also competing with them in the producing countries in the origin. And the other part of that differentiation is we therefore have been seen by our customers like our suppliers, the customers also see us as an independent trader. So we ship soybeans into China, we sell it to the processors in China, but the Chinese customers, the options of buying from the others in the industry, who also have processing facilities in China, and also are their direct competitors. So we are able to get market share growth from suppliers in the origin and from customers in the end markets. So that is the reason this portfolio shape is different. That is the reason why we have been relatively more stable and slightly better performance than what we have seen in terms of the peer results. Having said that, let me just deep dive a bit into the performance for 2024 for the Olam Agribusiness. So we had EBIT grow by about 5.8% to 1.024 billion in 2024. But this is on the strength of a 14% increase in volumes. Most of the increase in volumes came from the origination and merchandising segment. The merchandising and origination segment grew by roughly 5.5 million tons. The margins have been difficult last year given the trading conditions, but overall for the portfolio, the margins have remained at $23 a ton, which is $1 less than what we had earned last year. So it also shows that the margins are fairly sticky, and if you look at historically in 2022 and 21, you will see this trend of this model allowing us to make reasonably sticky margins in the way we compete and the way we operate. 21% of the EBIT came from our ordination and merchandising segment. Almost 60% of our EBIT comes from our processing and value-added segment. And about 20% of our EBIT has come from the fiber agri-industrial and ag services segment. We've had a growth. in invested capital from 5.5 billion last year to about 6.3 billion this year. Sorry, 6.7 billion this year. Largely driven by increase in the edible oil sub-segment and in the rice business where our volumes have grown and in the case of rice, our cycle times have extended as a result of all the policy changes from the major exporting country that is India where there have been export bans in various grades of rice, including Basmati and the long grain segment, but also in the broken rice segment and in the white rice segments. As a result of all these disruptions, our cycle time in these two sub-segments, edible oils and rice, had extended during the course of last year. Now, if you go take a deep dive into the three segments that we are organized under, which is the origination and merchandising segment, the EBIT was almost flat. And you have to see that in relation to the cyclical downturn that the industry was facing and the sector was facing. So in that context, we declined marginally from 224 million in the prior year to 222 million this year. And our EBIT per ton has been in the historical range of $5 to $8 per ton. This year it was $6 per ton, which is lower than last year at $7 a ton. In terms of invested capital, there has been a significant jump. A, because we have grown volumes by almost 5.5 million tons compared to the prior year. So volume-led growth has led to increased invested capital. Lower prices across the majority of the portfolio has helped us in reducing the invested capital. But the growth in the sub-segments in edible oil, where we have grown significantly the volumes, but also we've had higher prices. As you all know, palm prices, for example, has been quite high last year compared to the prior years. So edible oil complex price growth as well as rice, longer cycle times, have both resulted in a significant growth in invested capital, driven by a 5.5 million tons increase in volume. If you move on to the next segment, our processing value-added segment, which is contributing almost 60% of our operating profits, and where, as you have seen in the last few years, whenever we have doubled down in terms of capex and fixed capital, all of that has really been driven by in this segment, prioritized in this segment, where we are generating excess returns and where we are generating excess margins as well. However, the margins in this segment has come down to $115 this year compared to $143 in the prior year, mostly driven by currency depreciation that we saw in Nigeria. where we have significant exposure in the processing value added segment. So we have three wheat mills which we had acquired. We have got a 48% market share in Nigeria. We've had investments done in animal feed, both fish feed and poultry feed. And the currency depreciation in Nigeria has been a source of reduced margin. They're still extremely attractive and extremely return accretive. But in 2024, the margins fell from $143 a ton to $115 a ton. But overall, operating profits in this segment has marginally grown. It's almost flat like last year. $591 million of EBIT has grown to $601 million this year. We've already discussed about the invested capital changes. We've had a change of about roughly $300 million of invested capital in 2024 compared to 2023. And with that, if you move to our final segment, which is the fiber agri-industrials and ag services segment, this is a story of two parts. One business, our fiber business, has underperformed, partially market conditions, but also how we have managed that business. So we have to accept that we haven't got the best from the fiber business in 2024. But the other four businesses have more than compensated for the drop in the contribution from a fiber business. The rubber business, the wood business, and the ag services two sub-segments, which is our risk management solutions business and our trade and structured finance business. These businesses have combined to really hit the ball out of the park in terms of the contribution to operating profit and their contribution to the returns from this overall platform. So our operating profits for the platform improved from 152 million last year to 201 million this year. The margin per ton, despite the drag from the cotton business, is higher by about $10 compared to the prior year. and the invested capital has gone up because of what I mentioned earlier as well. So the EBIT by IC, which is lower than the portfolio EBIT by IC, that is a return, is lower in this segment, largely because of the EBIT by IC contributed by the fiber business. The other businesses have had much better returns in terms of EYC. With that, I'll move to the last part of my presentation, which is about the remaining OLAM group. The remaining OLAM group has some operating assets, some assets being warehoused there for exit, and then there were some incubating assets, which are really our ventures businesses, and we should look at these three segmentally, sub-segmentally, to understand this performance. So 2023 versus 2024, 2024 was far worse than 2023. The operating businesses, like for example, Rosemalco, which is a dairy business that we acquired from OFI, has done exceptionally well. Very high returns, but record high operating profit and record high returns for the Rosemalco business. The packaged foods business, primarily based in Nigeria and Ghana, had significant headwinds, but despite that, they've been profitable. So all our operating businesses, excepting for OPG, from an operational standpoint, declined. Otherwise, the five or the six operating businesses in the remaining OLAM group have all performed and contributed. Our big loss contributor in the remaining OLAM group last year was a non-cash translation loss on currency because we provide shareholder loans to OPD, which is a palm investment in Gibbon. The shareholder loans are provided to them in euros, and we saw the euro-US dollar change that happened this year from 1.11 when we started the year, and we ended at 1.03, and therefore we have to recognize this translation non-cash charge. This can be reversed if the currency changes over the course of the coming year. We are also looking at how to restructure that business from a currency standpoint so that we are not helpless about what happens to unrealized translation losses flowing through our P&L as well. So that is the main reason for the big delta from last year to this year. But if you disaggregate this and isolate the impact of the non-cash translation loss in the shareholder loans that we have provided, the subsidiary there, this will look much better as well. With that, I move on to the last part of this presentation, which is to provide a very brief, we have already had a detailed presentation on the transaction, which is part of our overall Project Mana reorganization exercise. that Project Mana reorganizing exercise, and besides that, we will split OLAM into three new operating entities, or different entities, OFI, you heard from OFI, you heard from OLAM, agree, and then there's a remaining OLAM group, the separation and the carve-outs have all been completed, and now the first big piece of that reorganization has also been executed, where we have sold our remaining shareholding in the Olam Agri business in two tranches. We had already done one tranche in 2022 where we sold about roughly 35% of our business. Sorry. Okay. Where we had sold 35% of our business. And now we have sold the remaining 65% that we owned, OGL owned. Firstly, selling 44.48%. in the first tranche which we expect will complete by December or by the end of this year and the second tranche where we have sold it by securing a put option where we can sell the remaining 35% at the third anniversary of the completion of this transaction. The buyer has got a call option within three years to acquire the remaining 19.99% that OGL owns as a minority. So after the put and call is done, we would have sold 100% of the OLAM group shareholding in OLAM Agri to Salik. And we will then have no shareholding interest thereafter in the OLAM Agri business. We have also clearly indicated to our shareholders of OGL that the group board is currently very actively engaged in the allocation of these proceeds, how much should go to injecting into OFI, how much will go to right-size the OLAM group balance sheet, and how much should be paid out as a special dividend. Once those determinations are made, We look forward to sharing with you the use of the 1.78 billion we are going to receive by selling that 44.8% and then the 800 million plus the closing adjustments and the equity ticker and the interest costs for that 800 million that we will be selling in tranche two once the put option is exercised or SALIK exercises their call option. So we will receive roughly 2.6 billion of proceeds once tranche 1 and tranche 2 is done, and the group board is examining how these proceeds will be utilized between these three major uses of those funds. How much will go into OFI, how much will go into the remaining OLAM group, and then what should be paid to shareholders as a special dividend. With that, we will complete with the business outlook and prospects. I think we expect continued volatility stemming from three or four main factors. The first is the geopolitical conditions, whether it's going to improve in terms of the rising tensions between the U.S. and China. or the conflicts in the Middle East, the conflicts in Russia and Ukraine, and how this is going to resolve and how quickly it is going to resolve. So we have to continue with that. Second is the Trump 2.0 trade policies and its impact on each of our businesses and what will really happen eventually in terms of the tariffs and counter-tariffs that are going to be the focus of everybody's attention, at least in our industry, for the immediate future. So that is also a big uncertainty at this point in time. Inflation, there is uncertainty about whether there will be an uptick in inflation and therefore, consequently, what is going to happen to interest rates, whether it is going to come down. The Fed is on pause, as you know. ECB is continuing to reduce interest rates and the Bank of England is also reducing interest rates as we speak. But that is some uncertainty whether it's going to be a revival of inflation and therefore a revival of interest rate hikes and might not come down as everybody was expecting. But all these are uncertainties and we will know. OFI has clearly articulated what they are focused on. It is very focused on pivoting its business from a commodity business, commodity plus business, to a value-added ingredients and solutions business, and it has taken various steps, and there are many other actions and initiatives planned by OFI in terms of making this transition and transformation happen. It has expertly and very well developed handle the extraordinary market conditions in coffee prices and cocoa prices. We are one of the few players in the industry who are in both these businesses and therefore face the full brunt of this market volatility. We are seeing implied volatility in cocoa go up to 90% at its peak against a historical average of 24-25%. We have seen coffee volatilities now reaching 80% against historical volatilities volatilities of, again, 24-25%. So the skill with which the team has managed and navigated through these exceptional circumstances and been able to satisfy and service its customers and suppliers has been also very good. Olam Agri has entered into now a new phase. We will focus now on getting this completion successfully of the transaction. We need to get a shareholder approval so we will have an EGM to get a shareholder approval for this purpose. We will wait for all the regulatory approvals and push to make sure that it comes on time. although it is not entirely in our hands, and any other customary closing conditions that need to be met, we will be focused on making sure that happens and then pursue a new future under the new shareholding ownership that will come into OLAM. And finally, on the remaining OLAM group business, we are very focused on reducing the losses in the OLAM group of the remaining businesses. and for the businesses that are growing and are profitable like the Rosemarco business, we'll continue to make sure that we can extract the maximum value from those businesses. We will hopefully make some progress in selling some of the existing assets that have been earmarked for divestment. We will focus on making sure that is also executed and there is measurable, demonstrable progress as far as the remaining assets OLAM group is concerned. With that, I will wind up and give you time for asking us questions. The floor is open.

Thank you, Sunny. Thank you, Shekhar and Motu for the presentation and your patience for holding your questions. I know you have several questions. If you can take the microphone from one of my colleagues on the side and let us know your name and which company you represent. Yes, Alfred.

Hi, hi. Alfred from Bloomberg News. So we reported early this month that, you know, the cocoa deficit in every cost sparked disputes between traders and the local exporters. We said, you know, in the report that traders, including Olam, refused to pay higher prices than, you know, the level government has set it. So, would you tell us what's the latest about the situation and how could it impact O-RAM's procurement in the country for this year? Sorry, I have another question. So, Sheikha, just to point out both the deficit and possible demand destructions on Coca. So may I ask, what's the future trading strategy look like for the company?

Yeah. Thank you, Alfred. I don't want to specifically respond to your report, which we've probably done separately. It's a daily emerging situation, and the pricing – for what we are buying. We will stand by all our contracts and we are standing by those contracts. There is obviously quite a lot of disparity and arbitrage in the market and the bids and the asks as you can imagine with the markets going up and down. And so that's a daily situation that's being resolved. For us, it's a long-term presence in the country in which we have navigated through many cycles from political coups to current markets, both ups and downs. So we are addressing that as it is with each of our suppliers individually and we'll stand by our contract. But I don't want to, I can't say anything specific beyond a general comment like that. On the supply-demand deficit, like I also mentioned, we don't have a futures trading strategy. We're not in the business of forecasting prices or taking any speculative bets against that. We have a very strong fundamental analysis and a fundamental view of the market that we track and update with our customers regularly. And at this point in time, with the supply drying up in the next season coming up only in the second half, we are watching how that supply develops. We have So therefore, the fundamental supply-demand will direct our actions rather than day-to-day futures prices, and we won't have a futures trading strategy alongside that.

It's also referring to the demand destruction possible.

Therefore, that's part of the fundamental supply-demand analysis. We are tracking both the supply side as well as the demand side, and we are in very close touch with our customers to understand that and manage that.

Yes, the gentleman in front.

Hi, I'm Chetan Kolbe from ING. A couple of questions. Muthu, would you be able to indicate of the $7 billion of unutilized lines, how much might be committed? And Shekhar, you mentioned that you're tightly managing the working capital, invested capital. Can you elaborate on that? And beyond that, I mean, in a high-priced, high interest rate environment, are there other levers which are helping you manage this, let's say, crisis or issue at the moment?

So I'll go first. Thank you. As we typically manage, especially in a dynamic situation, post the reorganization of the OLAM group, we have been primarily in the bank markets because we have not been able to access debt capital markets because of the progress of the reorganization. And hence, most of our debt is primarily floating and with 15% to 20% being committed and the rest are all uncommitted lines.

On the invested capital, I mean, some of the operational levers remain the same except that there is even more heightened focus if there can be, which is about shortening the cycle time. So our operational cycle time is the number one thing in our control, how quickly we buy, ship, export and manufacture and deliver. That's the case. So that's been an area and you'll see in the operational cycle times that's been crunched. I believe we are crunching it to levels beyond which there might be very little possibility, but it's happening on a daily basis. The second aspect is how we are working with our customers because this is as important for them where we have long-term contracts with them and how we are managing the contracts and the settlements against the contract beyond the operating cycle time. And that's also been something that we're working very closely with our customers, which also enables us to manage this within the boundaries of the contracts, manage this in a more effective manner. And the whole industry is kind of figuring this out because everybody is on one end or the other and has been managing it. I think everybody is trying to see what is the most effective way to manage the cash flow cycle times along with the... The last bit is what we cannot change is the inventory cost and the how we are managing the margin on that, because that we want to protect. We don't want to take any risk. So the only part, like she keeps saying, the only part, we will not take an additional risk on sold contracts or bought inventory, which we will protect at any cost in terms of hedging. So that is something that changes every day, and we have to manage that every day. But beyond that, everything that we do on the operational cycle time, on shortening the contract settlement time, that we can do with our customers. Those are all activities that we are doing. And that's really enabling us to manage this situation wherein our invested capital has gone up by 50% against market prices that have gone up by 2%.

Thank you for the question. If there are no questions from the floor, I'll take a few from the webcast question. Two questions for Shekhar, really. Can you explain the latest product mix within OFI? What are the products that contribute within each of the segments, global sourcing as well as ingredients and solutions? That's question number one. The question number two is that are you looking to invest further or divest some of the assets within OFI? And leading up to the question and also related to the overall OLAM group investments and divestments strategy.

Okay, so the product mix remains the same, and we are not dramatically changing that. When O5 was conceived, we put together five leading product platforms, which is cocoa, coffee, nuts, dairy, and spices. That remains the core portfolio of O5. What we have done is getting deeper into the way we operate in these platforms in terms of sourcing, manufacturing, innovation, and customer service. solutions that we deliver. A large change that has happened in the last five or probably last seven, eight years is in the mix of private label and what we do and that's predominantly nut spices and coffee wherein we are manufacturing for the shelf for the retailers. So that's kind of a change. It's not a change in product but the kind of delivery and support that we do. We do significantly more in terms of solutions and categories like These five product platforms service basically the bakery, confectionery, beverage, snacking, and culinary category. So we're doing a lot more of solutions in terms of a bakery mix rather than selling a dairy or a cocoa powder or even a tart along that. So a lot of our business is now slowly and steadily moving from raw material, which we still continue to do, to single ingredients, which we still continue to do, and in terms of category solutions and applications, that is increasing. Beyond the private label part that we talked about. And other channels like food service also we do. We're doing some increased co-manufacturing. So it's not about expanding product range. It's expanding the service and the value addition range that we are offering our customers. That's kind of the change here. And that's likely so we're not looking at getting into new product categories or new product platforms. really expanding the region. We see enough opportunity and put together just these five categories are roughly $800 billion and growing at 5 to 6%. So we have enough headroom in the very attractive categories. To the question on divestment and investment, yes, that's an ongoing exercise. Dynamically review our portfolio. We've talked about some of the investments. Similarly, we are looking at areas where we shut down some parts for cashew processing operations last year in India. So there will be, on the margins, some divestment we'll do. We also announced as part of, we did not renew the leases in some of the almond orchards that we had in the U.S., which were not making sense, and therefore we decided to not renew the leases. So that's an active management of the portfolio, both for investment as well as for divestment. I'll ask Sunny to talk about at the group level.

So on the Remedy Olam group is organized into three component parts. The first part is Olam Global Hold Co. This has seven assets. Six are operating assets. One is a non-operating asset. So the non-operating asset is Gabon Fertilizer Company, which we aborted. intended investment in getting down into fertilizer manufacturing. So that project was already about it and that we have announced. We are waiting to sell the land that was developed for the project at an appropriate time at the right price. So we are engaged in the process of divesting our Javan fertilizer project which did not get into production. So that is the one non-operating asset. The other six are operating assets. We have OPG. We have ORG. OPG is Olam Palm Gabon. ORG is Olam Rabah Gabon. Third is Rusmalko. Fourth is Carraway. Fifth is our partial stake, remaining stake in Arise Port and Logistics. And then we have a very small logistics business called Mantra. It's really neither here nor there. For these we want to unlock the value that is there in these businesses. As we saw in the performance review, we've had a great year in Rusmalko. So four out of these six operating assets were profitable and more profitable than the prior year. And then there are two that are under, which are loss-making and underperforming. I'm talking at an operating profit level, at EBIT level. So these businesses we are focused on implementing and executing all the restructuring that we are doing with these assets and then we will see how to monetize the value of these businesses. And I think we are reaching a stage where we feel confident that in the next near term we will be able to find a way, a pathway to monetize these assets. The second operating entity that we have is our ventures business, Newport Ventures. And we've got really three ventures there, two ventures now remaining. One is Jeeva and the second is Terrascope. And we have given them some specific milestones to achieve by the end of 2025. And then we will review what we want to do in monetizing the value of of these two ventures businesses that we are incubating. So this year will be a critical year for these businesses to step up and meet those milestones, and then we will evaluate our options for these two businesses. And then the third and final piece of the remaining OLAM group is the Mindsprint business, which was a captive IT services provider, and they are now moving from a captive IT services provider to... also starting to sell IT services and solutions to third parties. So this year they have achieved revenues of about $18 million in U.S. dollar terms. So the third-party business growth strategy for the Mindsprint business is working, beginning to start yielding. Of course, our primary objective in Mindsprint is to service the requirements of our captive units of 4-5 and Olam Agri, under the long-term services agreement that we have entered into with these companies. So that has done. Overall, Mindsprint has done extremely well. It's very profitable, very cash flow generating, does not require new capital in that business. And we will see how far they can grow and how much more potential is there in the business. But we are quite excited about the prospects of our Mindsprint business. So those are the three remaining businesses. Some will be sold. Some will be partially monetized. and we are keeping all the flexibility in making sure that the remaining OLAM businesses can generate value for the OLAM group shareholders.

Thank you, Sonny. There's a question about the RMI. The price of acquiring and hedging RMI should offset increased financing costs. Is that flowing through your credentials and would there be a lag effect that you will catch up in the following year?

Like I mentioned, there is a cost of this capital, there is a cost of risk, adjusted cost of capital and we are pricing that in with our customers. Some of it has flowed into last year, some of it is still lying in inventory and will flow through this year. Clearly we are very conscious about the cost and very particular about recovering that cost especially during this I think, use of capital and risk.

Just one additional comment. While headline gearing has gone up in OFI as a result of the extraordinary price situation in cocoa, coffee, and also the other commodities, he's promised to hear your answer on cashew and pepper as well. So it's not only cocoa and coffee, it's other products as well. But the important thing is OFI's net gearing after adjusting for readily marketable inventories has remained flat for the last many years. So all of this is exclusively rise in prices. The 4.3 billion growth in invested capital in OFI is coming from rise in prices. So the RMI nature, that's why we are not as concerned. Of course, we are concerned because there's interest costs and everything else. But we are not as concerned about gearing risk or a financial risk because of the extent of aromides. And in cocoa coffee, they are very liquid, very liquid aromides.

Question? Good morning. John from Unicredit. Firstly, I want to congratulate you for this very strong, solid results for 24. I have a question for Shekhar on OFI. So between 23 and 24, we saw volumes for AFI reduce. And this year, you've been able to actually increase slightly your volumes. And I wanted to see if you could share with us how you have achieved these very good results.

Like I mentioned, if you take a look at our medium-term guidance, which is there as part of the appendix to the results, what we want to look at is a low single digit to mid single digit volume growth and high single digit EBIT growth. So the focus is on maintaining our market shares or growing it in a very specific way where needed, but really about extracting more from the services that we offer and what I kind of articulated. So it is not really volume growth. Volume growth can, this year, for instance, our volume growth is 2%, our revenue growth is 40%. Revenue is even lesser because that will depend on the price can go up and go down. But I think there is a core volume that we have in every participating country and every participating product that we will preserve, not just the volume but also the market share and that is very important for us. We will add services like sustainability or traceability or impact creation to those volumes and then manufacture and provide innovative solutions whether private label or otherwise to that volume. So I think the real focus that we have and what you should have is on the increasing EBIT per ton on the volume rather than the tons itself.

There are no additional questions online. If there are no questions from the floor, I would like to invite the presenters to say any final remarks before we close the session. If there are no final remarks, I thank you for your participation and hope to see you in the next six months.

Thank you.