Olam to divest four business segments in next six years

Singaporean agri-business firm Olam has announced its plans to divest four business segments in the next six years to generate $1.6bn in cash that will be reinvested to tap growth opportunities.

As per the 2019-2024 strategic plan, the firm intends to divest its sugar, rubber and wood products and fertiliser businesses in addition to other assets that do not fit into its growth priorities.

It will also invest $3.5bn in 12 high-potential growth areas to bolster its portfolio. The company plans to boost margin through cost and capital efficiency.

Olam aims to generate additional revenue streams by providing differentiated products and services such as AtSource, risk management solutions, value-added services, ingredients and product innovation.

It intends to tap revenues from both existing and new channels such as  food service sector, e-commerce for small and medium-sized customers and co-manufacturing.

It will also explore partnerships and investments in new drivers for growth.

Olam intends to achieve operational excellence through tracking metrics, digital dashboards and performance scorecards, and continuous improvement.

While capitalising on changing consumer preferences, it plans to continue keeping sustainability at the core of the business.

By identifying, validating and deploying initiatives in digital transformation and disruption, the firm aims to capture and create value.

Olam co-founder and CEO Sunny Verghese said: “With our focus on farm-gate origination, end-to-end traceability, sustainability, digital initiatives and innovations like AtSource, Olam is already primed to start capturing growth from this fast-changing landscape.

“Now, following a comprehensive review, our strategy is fully focused on harnessing these health and ethical sourcing trends, as well as changing consumer preferences.

“Crucially, our strategy will allow us to play a leading role in re-imagining global food and agri-supply chains for the better, sourcing raw materials within the earth’s capacity to regenerate and transforming those materials to deliver food, feed and fibre for a growing population.”

Olam chairman of the board Lim Ah Doo added: “The board fully endorses this strategic plan that builds on Olam’s existing capabilities and sets a strong foundation for future growth. In addition, the company is in the process of appointing financial advisors to explore various options to maximise value for shareholders. This exercise is expected to be completed by Q4 2019.”

In November 2018, Olam International signed an agreement with Canadian technology company Canvass Analytics to use its artificial intelligence (AI) to explore ways of meeting the growing demand for food, feed, fibre and fuel globally.