SINGAPORE – The agribusiness and chemicals firm, Olam International has said it plans to release US$1.6 billion cash from divesting some of its businesses including sugar, rubber, wood products and fertilizer as it looks to establish a portfolio that is in line with its strategic priorities.
The cash would be used for reinvestment in prioritized selected businesses such as nuts, cocoa and coffee.
Olam, owned by Singapore’s Temasek said it is focusing on high potential growth businesses mainly targeting the agricultural sector.
As part of the strategic review, the company said it is planning to invest US$3.5 billion in a six-year period running from 2019-2024 in twelve prioritised high potential growth businesses with a goal to capture value from key emerging consumer trends.
The new strategic plan looks to drive margin improvement by enhancing cost and capital efficiency as well as generating additional revenue streams by offering differentiated products/services.
“This is a pivotal moment for Olam to refocus on our strengths and capitalise on new opportunities.
By executing on our refreshed strategic plan, we aim to be a global food and agri-business supporting our customers’ growing need for sustainable and transparent supply chains with a clear focus on tomorrow’s consumer preferences,” said Executive Director and Group COO, A. Shekhar.
Keeping pace with consumer and sustainable trends
Olam said the newly-endorsed strategic plan is driven by changing consumer and technology trends such as increasing demand for healthier foods, traceable and sustainable sourcing, e-commerce and the rise of ‘purpose’ brands.
This will help strengthen its already leading position in the speciality agri-products and food ingredients.
To enhance growth in this category, the company will focus on farm-gate origination, end-to-end traceability, sustainability, digital initiatives and innovations like AtSource.
Olam launched AtSource last year, a platform that provides sustainable and traceable sourcing solutions in the agricultural value chain.’
It was part of a strategy to enhance its ability to assess and positively influence the environmental footprint of the 4.7 million farmers in the company’s supply chain.
“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 fiber for a growing population,” said Co-Founder and Group CEO, Sunny Verghese.
Olam has identified four enablers to execute these strategic pathways: achieve operational excellence; sustainability; digital transformation and disruption; and attract, retain and inspire top talent.
