SINGAPORE — Olam International plans to reorganize its business portfolio to create two new operating groups for further growth in line with consumer trends and market opportunities.
The restructure is a part of Olam’s six-year strategic plan that the company began in January 2019. In general terms the goal is to “unlock long-term value” by simplifying the company’s portfolio, sharpen focus to enhance performance in operating groups, attract additional investors and accelerate profitable growth.
The two new operating groups to be created include:
Olam Food Ingredients (OFI): It consists of Olam’s cocoa, coffee, edible nuts, spices and dairy businesses. OFI has built a global value chain presence, including its own farms, farm-gate origination and manufacturing facilities. OFI partners with customers to co-create solutions that anticipate and meet changing consumer preferences as demand increases for healthier food that is traceable and sustainable.
Olam Global Agri (OGA): This group includes Olam’s grains and animal feed, edible oils, rice, cotton and commodity financial services businesses. With growth in Asian and African countries it supplies food, feed and fiber to meet increasing demand and a shift to protein-based diets.
“Over the past 30 years, Olam has built a valuable portfolio of businesses that have achieved leadership positions,” said Sunny Verghese, chief executive officer of Olam. “By simplifying our businesses across two distinct and coherent groups, each with a clear vision for profitable growth, it sharpens our focus and provides opportunities to capitalize on key market trends, while continuing to leverage the benefits of the Olam Group.
“We believe this will enable us to explore potential carve outs and IPOs in a sequential manner and attract additional investors who are aligned with the vision of these two new groups in order to maximize the value of our business.”
As the parent company of OFI and OGA, Olam International (OIL) will support entrepreneurial culture, implement cross-cutting initiatives and drive key enablers such as sustainability, operational excellence and digital transformation. It also will offer shared services to OFI and OGA to optimize collaborations. It also intends to help newer businesses such as Packaged Foods, Infrastructure & Logistics and Olam Palm Gabon to continuing growing and expanding. In addition, it will manage the responsible divestment of non-core assets and businesses identified in the strategic plan and redeploy capital for further growth.
A Shekhar has been appointed as the CEO of OFI and will therefore step down from his current role as group chief operating officer of Olam effective immediately. Verghese will hold charge as CEO of OGA and Olam International, in addition to continuing as Group CEO.
“The board of directors, building in part on the recommendation from the two independent financial advisers, believes that the reorganization will enable each operating group to pursue its own vision, take advantage of new market opportunities, optimize resources and attract new talent,” said Lim Ah Doo, chairman of the board. “The board has every confidence that this significant step forward will allow the company to strengthen and capitalize on its strong foundation to achieve higher growth and value creation, which we believe will be welcomed by our stakeholders.”
As part of the reorganization, Olam will provide periodic updates to stakeholders on the process and related developments, including changes in operational and financial reporting in line with the new structure.
Olam International is a food and agri-business company supplying food, ingredients, feed and fiber to 19,800 customers worldwide. Its value chain spans over 60 countries and includes farmers, processing and distribution operations, as well as a sourcing network of about 4.8 million farmers.