Olam Group Limited

Can I invite you to come into the room to have a seat for coffee? My pleasure to welcome all of you to Olam Group's presentation of the financial results for the first half entered 30th June 2025. I'm Hang Hung from Olam Group's Investor Relations. I'm pleased to host and moderate this briefing today, along with my senior executives of the group. Immediately to my right, Unlem Group co-founder and Group CEO, Sunny Vergis. Group CFO, Anne Mutukuma, seated on my extreme right. And none but not the least, the CEO of OFI, Unlem Food Ingredients, A. Shekhar. Let me call your attention to the cautionary note on forward-looking statements. This will be taken as read and fully understood. Let me call your attention to the cautionary note and like usual, our group CFO Mutu will kick off the presentation proper and provide the context and changes in how our group results are presented in this first half versus the prior periods before taking us through the group's consolidated P&L, balance sheet and cash flow. Thereafter, for segmentals, the respective CEOs of the operating groups will discuss each operating group's financials, Shekhar for OFI and Sunny for Olam Agri and the remaining Olam Group. We will then briefly recap the updated 2025 reorganisation plan and progress made in this first half and close the presentation with the business outlook prospects and the main takeaways. Thanks for your attention and I'll pause and hand the voice over to Mutu.

Thank you, Hangung. Good morning, ladies and gentlemen. Thanks once again for joining us for the first half 2025 group results. For a change, I'm going to start with the preamble, because some of you would have seen the change in presentation that we have impacted this half, first half of 2025, on account of the conditional sale of 100% of Olam Agri to Salik, which was approved by the shareholders of Olam Group in the Extraordinary General Meeting on July 4th, 2025. On account of this, The accounting standards and rules state that we have to now classify Olam Agri as a discontinued operations held for sale, and we have to only present the remaining part of the Olam group, which is Olam food ingredients and the remaining Olam group assets. So pardon me and be patient with me if I sound a little professorial now in trying to take you through three terminologies. The first one is H1, that is as presented. Because we are now carving out OLAM AGRI as a discontinued operations, we are only presenting the combination of OFI and remaining OLAM group as part of, in line with the accounting standards and rules. So obviously, for comparative purposes, we have to restate the first half of 2024 as a like-to-like comparison, comprising only of the performance of OFI and remaining OLAM group. So that is called as H1 2024 represented. However, to give you a full context of how the three operating groups, which is OFI, OLAM Agri, and the remaining OLAM group, have performed in the first half of 2025, as compared to first half of 2024, which we presented as a consolidated group the August 14th of 2024, just exactly a year ago, we are now going to present H1 2025 adjusted. H1 2025 adjusted will mean the combination of OFI, OLAM AGRI and the remaining OLAM groups operating in financial performance combined to have a like-to-like comparison what we presented in H1 2024. With that preamble, let me go to the first slide. This is exactly in line with what we have presented in the SGXNet that we had uploaded this morning, in line with the accounting standards and rules, which means that this is a combination of OFI and remaining OLAM group only and excludes OLAM-AGRI on a line-by-line P&L and balance sheet consolidation. because of the conditional nature of the sale of Olam Agri subject to regulatory approvals, the profit or loss that is coming from the first half financial performance of Olam Agri has been included in the group's P&L as a single line item in the P&L and I will take you through that. Similarly, the assets and liabilities of Ola Magri have now been collapsed from the group's balance sheet into one line for assets and one line for liabilities. So that is the fundamental nature of change in terms of how we are representing and which will be done till the tranche one of the sale of Ola Magri to Salik is completed. With that, you can see that for the OFI and ROG, remaining Olam Group combined, the first half 2025, we were at 2.2 million tons of volume, a flattish volume performance. However, a 50% increase in revenue growth to $15.3 billion. primarily on account of OFI, as OFI executed the high-price contracts, basis the high input prices, especially in cocoa and coffee, that we witnessed through 2024. The EBIT, excluding Olam Agri, stood at $708.7 million, a healthy 85.5% increase, with OFI recording a double-digit EBIT growth to $535 million. That translated into an operational PATV for the group at $327 million. Please be reminded that this $327 million, as I'm explaining, includes the Olam Agri's first-half PATV, as discontinued operations. And that translated into a PACME of $324 million. The percentages are a little bit meaningless because there was a big swing in the profitability of remaining Olam Group, which was at a loss situation in the first half of 2024, has swung into a positive operational performance in the first half of 2025. As you all know, Cocoa and coffee prices in the OFI portfolio, notwithstanding dairy and spices prices, had peaked during 2024, had come off in 2025, the first half, but still remain elevated. But that has resulted in a significant reduction in utilization of working capital, especially as OFI was executing the high price contracts and bringing down the inventory levels. And that had reduced our free cash flow negative position from $5.5 billion this time last year to just under $1 billion, a change of $4.4 billion SING dollars positive. That automatically translated into a lower gearing for the OFI plus ROG combination at 2.09 times compared to 2.6 times in the first half of 2024. So this is basically at a glance what is H1 2025 reported with the H1 2024 represented. Now I move to the third aspect of what I explained as a preamble, which is H1 2025 adjusted. This means that we are now simulating a pro forma P&L, or a financial performance, for OLAM Group Limited, which will have all the three operating groups results on a line-by-line simulated consolidation. So that translates into roughly 28 million tons of volume for the first half for the entire OLAM group, a 14.5% increase in volumes, primarily coming off from OLAM Agri, especially in the grains, oil, seeds, and edible oil platform. Translated into a 33.3 billion Sing dollars of revenue, a 23.8% increase on a year-on-year basis. As I had explained, bulk of the revenue increases had come from OFI operating group. you will see that the operational PATMI is still the same at $327.1 million because even in the represented... H1 2025 presentation, the profit of OLAM AGRI has been included as a one line in the P&L and hence at the PAT or the PATME level, the results are the same. So $327 million of operational PATME or a $324 million of PATME resulting the same free cash flow to equity of roughly under a billion dollars of negative free cash flow to equity, but a huge swing of $4.4 billion this time last year. You will notice the gearing has changed from 2.6 times in end of H1 2024 to 2.83 times as we have now combined the net debt to equity impact of OLAM Agri also in this simulated performance. So it was 2.09 times excluding OLAM Agri in the end of H1 2025 and has become 2.83 times on a simulated basis including OLAM Agri's net debt to equity. So I will just quickly go into this slide, which is a new slide, which is a very busy slide, but trying to put everything together in terms of how H1 2025 has been presented after we have considered Olam Agri as a discontinued operations, which is the first column that you are seeing. which I presented two slides ago. The second column is a like-to-like comparison of H120 24 performance, stripping out the Olam Agri performance this time last year, and that gives you a percentage of change on a volume EBITDA, EBIT, PATMI basis. We have now disaggregated the PATMI into continuing operations, which is OFI plus remaining OLAM group, that stood at $177.4 million, and discontinuing operations, which is OLAM-AGRI, stood at $146.4 million for the first half of 2025, on comparison of a negative $92 million for continuing operations in the first half of 2024, and $140 million for the first half of 2024 for discontinued operations, or OLAM-AGRI. Now, if you look at the fourth column, this is the simulated financial performance for the entire group, including Olam Agri on a line-by-line consolidation, translating into a 28 million tons of volume, roughly $33.3 million of top line, $1.58 billion of EBITDA, and translating that into 1.2 million. billion of EBIT, you will recall that the first column, EBIT, which excludes Olam Agri, stood at $708 million of EBIT, and including Olam Agri's EBIT, on the fourth column you will see that it is $1.2 billion of EBIT, a 35.5% increase as compared to $900 million roughly, this time in the first half of 2024. And that translated into a $324 million of PATMI or $327 million of operational PATMI. Again, disaggregated the fourth column into a continuing operations of roughly $181 million of PATMI. operational PATMI, which means Wi-Fi plus remaining OLAM group, and $146.4 million of discontinued operations, operational PATMI, a marginal decrease of 3.7% against first half of 2024. Point to note, OFI has delivered a double-digit EBIT growth of 12.7% to $535 million, primarily led by successful pass-through of costs, which was a big concern most of us expressed this time last year. There has been an improved performance by the remaining OLAM group operationally, and that also includes, in addition to strong operating performance by the remaining OLAM group assets, has also been supported by an unrealized foreign exchange gain. on account of significant appreciation of euro against U.S. dollars in the first half of 2025. Most of you will know the euro to U.S. dollar ended in December 2024 at roughly 1.03, and that currently is at 1.17, a significant 12% increase that has resulted in unrealized foreign exchange gain that has also helped as a tailwind for the improved operating performance for the remaining Olam group. Olam Agri, which is the discontinuing operations, had recorded a marginal decrease in EBIT from $495 million, but despite significant impact from U.S. tariffs and the difficult market conditions. And finally, pleased to announce, in spite of all of these, the Board of Directors have declared an interim dividend of $0.02 as compared to $0.03 in the first of 2024. So this is a disaggregated look at volumes for the entire OLAM group on an adjusted basis. We grew from 24.2 million tons to roughly 28 million tons of volumes. As you can see, primarily the growth in volumes have come from OLAM Agri, roughly 3.5 million tons, and more so from the grains, oilseeds, and edible oils platform. In terms of profits, we were at roughly $900 million of EBIT on a combined basis that had grown to $1.2 billion of EBIT for the first half of 2025. Again, you can see that OFI grew its EBIT by $60 million. Remaining OLAM group grew by $266 million. A word of caution, it includes the unrealized foreign exchange gain that has been recorded in the first half of 2025 because of sharp appreciation of euro against US dollars, and a marginal decline in EBIT of $12 million from Olam Agri, resulting in a healthy EBIT of $1.2 billion or a 35.5% increase year-on-year. We talked about the operational PATMI at $327 million, which grew from a $48 million of group operational PATMI in the first half of 2024 to a $327 million of operational PATMI, primarily led by strong operating performance growth, a $327 million of strong operating performance growth, offset by increase in net finance costs of $55 million and a marginal increase in taxation for the first six months of this year, aided by lower exceptional items of $10 million and also a lower contribution from the non-controlling interest, resulting in a PATMI of $324 million or an operational PATMI of $327 million. On a consolidated basis, here again, you can see that there is only a marginal increase in invested capital, roughly half a billion dollars, primarily led by increase in working capital due to the seasonality, especially in Olam Agri, resulting in gearing unadjusted net debt equity of 2.83 times. But as you all know, The real indebtedness of the company or the group is primarily looked at after adjusting for RMI or readily marketable inventories and secured receivables. Adjusted for RMIs and secured receivables, you will see that our net debt equity is actually well below one time at 0.98 times as of 30th June 2025. A very healthy free cash flow, I talked about it, which primarily swung from a negative $5.4 billion this time last year to just under $1 billion at $9.45 million in the end of H1 2025, primarily led by decrease in commodity prices and very well utilization of working capital efficiency by OFI, resulting in a $4.4 billion of positive swing during the first half of this year. We have sufficient liquidity with, as usual, diversified pools of capital. We have roughly $1.5 billion of cash, $7.5 billion of RMI or near cash, roughly $650 million of secured receivables, and more importantly, unutilized bank lines of north of $3 billion. resulting in a total available liquidity of $12.8 billion, or roughly $13 billion, the very healthy headroom of $5.6 billion. I would like to take this opportunity to really say during these difficult market conditions, macroeconomic situations, geopolitical conditions, both OFI and Olam Agri has been able to successfully refinance its debt facilities, not only for 2025, but also spilling over into first half of 2026. So, till date, OFI has refinanced up to $2.4 billion of U.S. dollars of its debt facilities, and Olam Agri has refinanced $3.85 billion U.S. dollars of its debt facilities, resulting in a very healthy situation in terms of our... ability to fund, finance any changes that can happen either in commodity prices or in market conditions. I once again take this opportunity to thank all our bankers who are here and also participating to our webcast. Thanks once again. And with that, I will close my presentation and hand over to Shekhar. Thank you.

Thank you, Mathu, and let me add a warm welcome to all of you. Thank you for joining us today. I get a chance to see all of you only once in six months, so I'm going to remind you just briefly about Overfy, what brought Overfy together. You're all aware of this. We have five large global leading platforms, fully integrated platforms in cocoa, coffee, nuts, spices, and dairy. And the key part of our strategy is how we can extract full value on the part of integration at scale within each of these platforms. And in the last five years, since the inception of O5, we are increasingly also enhancing the part of integration at scale across these five platforms. And that comes from the common customers, the common capabilities, the common channels that we focus on, and the common categories of end-use applications, whether it's bakery, confectionery, snacking, beverages, et cetera, which, as you can imagine, use all these products fairly significantly. So the power of portfolio isn't the power of the platforms that have been built over the last 30, 35 years and the increasing amount of integration by which we can provide greater value-added ingredients in each of these platforms. And we have invested behind that and are continuing to invest behind that. And then what we can do to extract value across these platforms for which you know that we launched the food and beverage solutions platform last year, which is trying to build solutions for our customers using all these ingredients and more. within the categories that we talked about. And I look back at the last five years and we have been speaking at different times with various things happening across the world. So the way I look back is this proves the resilience of the portfolio. the diversified portfolio and the power of the portfolio to work through COVID and COVID recovery, a few wars and some more after that, the interest rates hike, significant hikes in commodity prices. And through this period and up and down, and obviously it has been very volatile and very uncertain and it's not been an easy ride, But I think what it talks about is that during this period, we have been able to ride these cycles with lead and lag, obviously, in managing the volatility, but through that, being able to improve our EBIT margins. stay focused on changing the portfolio shape with which we set up this business in terms of the ingredient solutions and global sourcing, ensuring that our global sourcing platform becomes even stronger and provides a platform for managing this volatility. And frankly, without the strength of that platform, without the strength of the integration, without the boots on the ground and what we have built over the last 35 years, we could not have delivered to our customers through these cycles. So if anything, the last five years, and including the last six months, have proven the resilience of this model and the validity of this model supported by our customers and all our other partners. And that's hopefully reflected in small part in the last six months' results. Mutu outlined the overall results of the group with all the adjustments and representations. In the case of 405, this is the way we presented it last year. And compared to that, we are pleased to say that there's been a good growth in EBIT over last year. But what's more pleasing is that it is with improving margins, which is reflected in the EBIT per ton. and the mix of the solutions and global sourcing, which is now at around 67 to 70%, and has grown from something like 50-50 or 55-45 when we started the journey of 405. So it has happened through a steady mix of investments that we have made in fixed assets across both Greenfield as well as acquisitions. And you know all the investments that we have made and we have talked about in the past. And that's a big part of improved margins. It's also the kind of solutions we are offering, whether it is single ingredients or mixed solutions, the private label solutions, and the business and private label has grown quite substantially during this last five years. It's a mix of all that. So it's a series of things and deliberate choices we have made in terms of strategy and continued investments despite all the volatility that we have faced and the world has faced in this period. So quite pleased with that trend, which continues. So roughly when we started this journey, we were roughly at about $500 million or 650 million Sing dollars EBIT, which is now, and this is the half-year results. Last year, we reported roughly about 1.1 billion Sing dollar EBIT. So it's been a steady growth, and this half signifies the same trajectory of growth and the same momentum. Obviously, this has happened at fairly significant elevated levels of capital. And you all know what's been happening over the last 18 months and continues at this point in time in terms of elevated cocoa and coffee pricing, especially. There have been bits and pieces in cashew and pepper also, which have seen elevated prices. But the impact of cocoa and coffee is substantive on the O5 portfolio. Compared to last year, this time, that increase is just 3.7 compared to a 12.7% increase in EBIT. We just got roughly a 3.5% increase in capital. And that is happening because of the way we are managing the capital, allocating the capital, ensuring cycle times during this period so that we can extract capital. risk-adjusted premium which deserves the size of invested capital as well as the risk and the enhanced risk in this portfolio. So it's coming out of a mix of various strategic, the EBIT growth is coming out of a mix of various strategic choices we are making, but also coming from us seeking and getting from our customers an enhanced cost of capital as well as cost of risk that is deployed. So that's on an overall level, taking a quick look at the global sourcing level. Global sourcing potentially took a big chunk of the effect in the first six months of last year when there was a sudden increase in cocoa prices at that time, followed by coffee prices in the second half of Q2. So we had sold contracts and we were trying to work through those sold contracts at that point of time. It's jumped back with a roughly, so the 68% growth is against a tough first half last year. But nevertheless, it's done it on almost similar capital and with significantly higher EBIT per ton. And that's, again, a very strong reflection of the strength of this platform the strength of our presence deep in the rural areas of all the major producing countries, our ability to source and offer sustainable crops across the portfolio of products that we do, and do that in a cost-effective and capital-efficient manner. So that still remains a very strong part of our future, has been built over a long period of time, but it's going to be a significant part of our future as well. On the ingredient solution, we had last year at this point in time, because we had the presence in these geographies through the global sourcing platform, we had done very well in the first half of last year. So against that, there is a very modest, there is a marginal decrease in the EBIT. with a slight increase in our capital. But if you look at the past history, you've got all the records. If you look at the kind of margin improvements that this segment has shown, and these numbers reflected compared to the last few years, this is still quite healthy and quite significant. So on a half year to half year, it doesn't show that kind of progress as compared to the global sourcing. But these numbers are quite significant compared to the last five years' history. And so we feel quite pleased with the kind of margin improvement that this segment is also showing. So I'd like to close by just kind of highlighting that it's a good first half, pleased with the momentum, but also pleased with how we are positioned for the second half, where we don't expect the volatility to come down or the world uncertainty to come down. But we feel far more secure with the injection of the $500 million of capital, which happened in the end of June, which is included in these results. as well as what we announced today as the refinancing that Mutu talked about of $2.1 billion. So I would like to place on record my sincere thanks to all our partners here in the room and outside. The fact that 18 global banks supported this refinancing in these kind of markets is a testament to your partnership, and we thank you for that. But with the equity and this refinancing in place, we feel quite proud. confident and cautiously optimistic about the second half and time ahead. Thank you so much for joining us.