Singapore’s Olam International to sell off rubber business and others to reel in US$1.6 billion

Singapore-based agriculture and food major Olam International plans to sell off four of its businesses, including rubber, over the next six years to yield an income of US1.6 billion; and to invest a further US$3.5 billion in its agriculture and global food systems that include 12 food business segments, such as dairy, nuts, grains and animal feed, as part of its 2019-2024 strategic plan.

Besides the rubber business, the company plans to sell off its sugar, wood products and fertiliser businesses. The divestments of these units has already started with Olam having halved its stake in Indonesian sugar-refining subsidiary Dharmapala Usaha Sukses (DUS) in December 2017, after selling 50% interest to sugar giant Mitr Phol Sugar Corporation for US$100 million.

In its rubber business, Olam owns a crumb rubber processing facility in Côte d’Ivoire, the largest exporter of natural rubber in Africa. It also undertakes third-party sourcing of natural rubber in various forms, and has a joint venture plantation with the Republic of Gabon. Under its third-party trading, it imports and exports natural rubber in blocks, sheets and latex form.

Under its strategic plan, Olam intends to improve its margins through cost management and budgeting, which are expected to yield savings of US$200 million. The Olam board is also further pushing financial advisers find more options to maximise value for its shareholders.

Olam holds leadership positions in multiple specialty agri-products and food ingredients, with defensible strategies for more mainstream bulk products. Olam’s operations extend across the value chain, including buying from an extended network of 4.7 million farmers, managing orchards, plantations and farms, processing and ingredients innovation. This new strategy builds on the current business model which has yielded strong results and growth across Olam’s diversified portfolio.

Co-Founder and Group CEO, Sunny Verghese said: “With our focus on farm-gate origination, end-to-end traceability, sustainability, digital initiatives and innovations like AtSource1 , 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.”