Olam Group: Crown Jewel — ofi

Not Financial Advice. Olam Group’s current stock price S$0.96, my target price: S$2.5 (According to the SGX filings, Olam Group’s net asset value after Olam Agri disposal to SALIC is projected at S$2.5 per share). I am long Olam Group. I estimate blockbuster results by SGX-listed Olam Group in H2 2025, driven by lower interest expenses and reduced borrowings due to lower interest rates and dramatically lower cocoa prices (down ~50% YTD). Moreover, strong results have been reported in the Australian almonds business.

Why I like ofi, the Crown Jewel of Olam Group.

As a food ingredients industry professional, I am acquainted and impressed with Olam Food Ingredients’ (ofi) operations, expertise, scale, and growth. As of June 30, 2025, ofi’s book value stands at about S$5 billion. A valuation of ofi at 3x its book value would imply a market value of S$15 billion, similar to Olam Agri’s disposal at 3.1x its 2024 book value to Saudi SALIC. While Olam Group’s total market cap is approximately S$3.65 billion, I expect ofi’s standalone valuation to be around S$15 billion. This is supported by ofi’s specialized, higher-margin ingredients portfolio, a globally distributed traceable and sustainable supply chain, a deep farmer network, private label manufacturing capacity, and a blue-chip MNC customer base (including companies like Nestlé, Mondelez, Costco, and Starbucks).

ofi is one of the largest cocoa processors globally, alongside Barry Callebaut and Cargill. It is also a top supplier of coffee (Arabica, Robusta, soluble coffee, and green coffee beans), spices (including the acquisition of Olde Thompson, one of the largest US spice/seasonings companies), dairy, and tree nuts (it is among the largest nut processors and packers in the world).

In times of crop dislocations, and supply/price volatility — such as the recent volatility in cocoa, coffee, cashew, and pepper prices — it is crucial for companies to remain closely connected to farmers. Over the past 35 years, ofi has built an outstanding farmer network that strengthens its resilience. After the volatile periods of 2023 and 2024, I believe that in H2 2025, ofi will continue to pass high commodity costs on to its customers, similar to its successful approach in H1 2025. At the same time, decreasing interest rates and cocoa prices in H2 2025 will reduce the Group’s borrowings, boosting Olam Group’s net income and free cash flows compared to the *dismal H2 2024 results*.

Cocoa and coffee prices have exhibited extreme volatility from 2023 to the present. I am impressed with ofi’s risk management strategy concerning commodity prices. ofi hedges extensively, especially when dealing with volatile prices for cocoa beans and coffee. The combination of lower interest rates and a sharp decline in cocoa prices (down about 50% since the end of 2024) will also help reduce ofi’s hedging and financing costs at the end 2025. That’s why I expect great profit and free cash flow results by Olam Group in H2, 2025.

I am now going to explain some the structural and macro tailwinds behind the ofi businesses and operations.

Retrieved from Olam Group Annual Report 2021.

Vietnam Example: Viet Agriculture export wins means ofi wins!

Vietnam’s top three agricultural exports have set new global records. Forecasts for 2025 show that industry groups in Vietnam project the following: Coffee (primarily Robusta, solubilized coffee and green coffee) exports will exceed $8 billion. Cashew nut exports will reach $5 billion. Pepper exports will hit $1.5 billion. ofi Vietnam is currently the largest exporter of cashews, pepper, and instant coffee in the country, operating seven large factories with 7,500 employees across Central and South Vietnam. ofi operations interface with a network of 2 million farmers. ofi is also one of the largest exporters of green coffee (mainly Robusta) in Vietnam. ofi began operations in Vietnam in 1997. Over nearly three decades, Olam has grown to become one of the country’s leading exporters of cashews, pepper, and both green coffee and soluble coffee. Today, Olam operates 24 production facilities across central and southern Vietnam. ofi recently had 3 of its factories in Vietnam recognized among the Top 20 Leading Excellent FDI Enterprises 2025 for operational excellence and sustainable growth.

Cashew Nuts Example:

Vietnam is the top exporter of processed cashew nuts globally, accounting for around 80% of the global supply. However, most of the raw materials come from Africa, with the majority of raw cashew nut (RCN) imports originating from African countries, primarily Côte d’Ivoire, the world’s largest RCN producer.

Recently, African countries have been pushing to process more of their raw cashew materials locally to create value-added exports. As a result, some African nations are beginning to restrict raw cashew exports, which could pose challenges for Vietnamese cashew processors in the future.

Since ofi has factories both in Africa and Vietnam, it is well-positioned to keep growing larger in the growing cashew market, particularly in products like ready-to-eat cashew packs. Recently, Vinacas (the Vietnam Cashew Association) honored ofi for its efforts in advancing sustainable cashew processing in Vietnam.

Africa Example:

The world’s top cocoa producer, Côte d’Ivoire, plans to break into Africa’s top five oil economies by 2035. Côte d’Ivoire has risen into Africa’s top 10 investment hubs thanks to industrial reforms, emerging as the continent’s fastest-rising investment destination.

Industrial Reforms and the Cashew Processing Boom in Côte d’Ivoire. A major success story has unfolded in the cashew nut industry, where Côte d’Ivoire is the world’s largest exporter of raw cashews. In 2024, the country processed 30% of its cashew output domestically, with a goal to reach 50% by 2030. Singapore’s Olam Group was an early entrant into Côte d’Ivoire market, opening its first processing plant in 2012. Today, Olam operates four facilities in Côte d’Ivoire. Ofi, with significant operations in Nigeria, Ghana, and Côte d’Ivoire, has particularly strong roots in the cocoa beans and cashew nut sectors.

Cocoa and Chocolate Example:

ofi is one of the top 3 cocoa bean processors, alongside Cargill and Barry Callebaut. Cocoa supply is largely concentrated in West Africa, which accounts for about 60% of the global supply, primarily from Côte d’Ivoire and Ghana. After the extreme volatility of 2024, Ofi effectively managed the fluctuations in cocoa prices. In H1 2025, Olam successfully passed on price changes to its customers. Olam operates with a cost-plus model (a fixed-margin approach) and hedges its cocoa inventory to minimize the impact of unforeseen price changes, whether upward or downward. This strategy is similar to that of Barry Callebaut, which also uses a cost-plus model and hedges its cocoa inventory. As cocoa bean prices have dropped by about 50% over the past six months, the share price of Swiss-listed Barry Callebaut (SWX: BARN) has risen by about 50% in the same period.

ofi’s Amsterdam lab innovation and R&D in cocoa and chocolate was recently featured in Lara Williams’ Bloomberg piece, highlighting the future of chocolate. With volatile cocoa prices and changing consumer expectations, ofi is working closely with customers to optimize costs without compromising on the taste, color, or quality of chocolate products. ofi is also focused on de-risking supply chains and providing sustainable solutions through an integrated approach across cocoa, coffee, dairy, nuts, and spices. With a commitment to global sourcing and sustainability, ofi aims to drive meaningful change for both people and the planet, ensuring long-term success for its customers and communities.

Earlier in 2025, Nestlé has announced a new partnership with ingredient supplier ofi to reduce carbon emissions and combat deforestation in cocoa production. As part of this initiative, which will take place across Nigeria, Ivory Coast, and Brazil, around 25,000 cocoa farmers will receive support in transitioning to climate-smart farming practices over the next 5 years.

Coffee Example:

ofi is among the top coffee processors and exporters. Despite Trump’s recent tariffs on Brazil (the largest Arabica exporter — about 40% of global supply) and the recent floods in Vietnam (the largest Robusta exporter), I’m not overly concerned about coffee. This is because the coffee crop cycle is shorter (2–4 years) compared to cocoa beans, and farmers tend to plant more coffee trees in response to high prices, which helps stabilize the market. Additionally, even at high prices, coffee remains much cheaper than cocoa, and its production and storage cycles are shorter, resulting in relatively low cash cycles, even amid recent price increases.

Coffee production is also more geographically diversified compared to the more concentrated growing regions for cocoa beans (about 60% of global cocoa supply comes from West Africa). This year’s bumper coffee and cocoa crops should help temper potential price hikes. Moreover, ofi has demonstrated its ability to effectively pass on price changes to customers following the 2024 commodity price shocks, as evidenced by its strong H1 2025 results.

ofi is committed to staying close to farmers and the supply chain. Given recent volatility in coffee supply and prices, ofi’s greenfield investment in Brazil in 2022 appears well-timed. The new facility in Brazil complements Ofi’s existing operations in Vietnam and Spain, enabling the company to provide its global customer base with high-quality freeze-dried and spray-dried instant coffee. This strategic investment strengthens ofi’s position as one of the top three independent producers in the growing global soluble coffee market, which is projected to reach $52.2 billion by 2031. Additionally, ofi creates a significant economic impact in Brazil’s premier coffee-growing region. The ofi facility is certified by the Rainforest Alliance for its traceability and sustainability.

Tariff Arbitrage Example:

ofi is well-positioned to mitigate the impact of tariffs on food prices, according to Roel van Poppel, Ofi’s Chief Sustainability Officer. Olam’s extensive sourcing footprint enables it to offer food manufacturers alternatives from countries less affected by tariffs. Ofi’s global presence helps balance trade flows and reduce reliance on any single market. According to Gaurav Patil, Country Head of ofi Vietnam, the impact of these tariff policy changes has been manageable, thanks to Olam’s diversified operations.

Australian Almonds Example: High Almond Prices, and High Profits of a Competitor

Olam Orchards Australia is the largest almond grower globally, with 4 million trees spread across 15,000 hectares in Australia, and an additional 4,500 hectares of orchards in California, USA. This diverse growing footprint enables Olam to supply fresh almonds to consumers year-round. Amid China’s tariffs on California almonds, China shifted its demand to Australian almonds. Olam’s processing plant near Carwarp in Northern Victoria is one of the world’s largest, designed to accommodate the company’s entire Australian production.

ofi is the second-largest grower of Australian almonds, following ASX-listed Select Harvests Ltd (ASX: SHV).

Select Harvests’ end-November 2025 Commentary Highlights:

• A 37–40% year-on-year almond price increase 🚀
• Current spot prices for premium grades at A$12–A$13/kg.
• Tight global almonds inventory.
• Strong demand for Australian almonds from India, China, the EU, and Southeast Asia.

These conditions benefit all Australian almond producers, including Olam Australia and Select Harvests!

Select Harvests (SHV) reported a net profit after tax of $31.8 million for FY2025, up $30.9 million from FY2024, and EBITDA of $82.4 million. SHV revenues from continuing operations totaled A$398.3 million, an increase of 35.3% 🚀. The average almond price during the fiscal year was A$10.18/kg (up 32% from FY2024’s A$7.69/kg). SHV’s fiscal year ends in September. Due to strong results by Select Harvests in the late 2025, I expect great results from Olam’s Australia Almond operations in H2 2025. Olam’s Australia Almond financial results are significant to Olam Group results. For example, Olam Group’s 2023 results were notably impacted by a one-off loss from its Australian almond operations, which faced a 35%-40% lower crop yield due to poor bee activity and adverse weather conditions. This resulted in an exceptional charge of about S$111.3 million for the first half of 2023 for Olam Group.

Olam Almonds’ listed competitor, Select Harvests Australia, reported strong 2025 results at the end of November 2025.

Pepper and Spices Example.

Ofi’s operations in Vietnam are its largest in Asia. In 2021, Olam acquired the U.S. spice firm Olde Thompson ahead of ofi’s US$17.7 billion planned IPO in London. Olde Thompson is the company behind Costco’s flagship Kirkland Brand Black Pepper.

Vietnam is a key player in the global spice market, with its pepper accounting for 40% of global production and 60% of global trade. This makes it an essential ingredient in the meals of millions of families around the world. Like elsewhere, ofi supports farmers in Vietnam by helping them increase crop yields and obtain global quality certifications, such as Fair Trade and Global GAP (Good Agricultural Practices).

Temasek’s (Majority Shareholder) Push to Unlock Olam Group’s Value

Temasek Holdings is the majority owner of Olam Group, and among its portfolio, Olam Group has seen one of the lowest stock price performance. Given Temasek’s recent focus on enhancing the performance of its Singapore equity holdings, it is likely that Olam Group will be under increased pressure to unlock value for its shareholders. While Olam Group is down about 20% year-to-date (YTD), the Straits Times Index (STI) is up about 20% YTD, near its all-time high.

After the disposal of Olam Agri to Saudi SALIC, ofi has become the main focus for Olam Group’s management and largest shareholders. This shift, along with the ongoing monetization and sale of assets within the Remaining Olam Group (ROG), reflects a strategic pivot. Additionally, the recent appointment of Dinesh Khanna as the Temasek Director on the Olam Board (replacing Nagi Hamiyeh) signals potential changes ahead. Khanna, who joined Temasek about a year ago, brings extensive experience from his 23 years at Boston Consulting Group (BCG).

Olam Agri Ongoing Sale to SALIC — Updates

Olam Group, August 14, 2025 — H1 Results Briefing: “*We have filed for regulatory approvals in 22 jurisdictions. Of these, the EU is considered one jurisdiction, and we’ve already received 7 approvals.*”

September 3, 2025: The EU approves Saudi firm SALIC’s purchase of Olam Agri.

September 30, 2025: India’s CCI approves Saudi Arabian PIF’s bid for a majority stake in Olam Agri.

October 7, 2025: Pakistan’s CCP clears SALIC’s takeover of Olam Agri holdings.

October 14, 2025: Saudi PIF-Backed SALIC to Pursue 100% of Olam Agri as soon as next year.

I tend to appreciate the delay in Olam Agri deal because it allows Olam Group to continue receiving most of the profits from Olam Agri operations in 2025 as the current majority owner. Additionally, Olam Group is receiving an extra US$636,855 daily (annualized to a whopping US$232 million or about S$300 million 🤑) as additional SPA consideration from SALIC. So longer the delay it takes to close the deal, means more money for Olam Group from SALIC for Olam Agri disposal, in my opinion.

Aliyev Jamal, CFA December 4, 2025 (Thursday)

Not Financial Advice. This blog represents my personal opinions. Not investment advice.

For informational & educational purposes only. Do your due diligence. Consult professionals.