Ladies and gentlemen, good evening to all who are present in person today with us in the room, and to those who have joined remotely online on our webcast of our management briefing of our half-year results for the period ended June 2023. I'm Hung Hoeng of Olam Group Investor Relations. Today, I have the company of our senior management team at this results briefing, led by our co-founder and Group CEO, Sunny Verghese, Group CFO, N. Muthukumar, and CEO of ofi, Olam Food Ingredients, A. Shekhar. As always, we are pleased to share with you our group results for the first half of this year, as well as the results of the operating groups. Our Group CFO, Muthukumar, will take us through the consolidated Olam Group financial results. ofi CEO, Shekhar, will follow on with the financial and operating results of ofi.
Sunny, as the CEO of Olam Agri, will then discuss the performance of Olam Agri, as well as the remaining Olam Group businesses. Along with his views on our business outlook and prospects, Sunny will also share with us the latest update around our reorganization plan. He will also close the presentation with today's take-home messages. We will open up the floor and webcast for questions and answers, and you may now post your question on the webcast, which we will address after the presentation. I'll pause here and hand over to Muthu to begin. Thank you.
Thank you, Hung Hoeng. Good evening, everybody. Apologies for bringing you on a Friday evening. I know how much you would like to complete this as early as possible, but my style always has been, as some of you would have seen, is to stand and present. The fact that I am sitting and presenting should connote the comfort with which we are sitting today in presenting the first half and our cautiously optimistic outlook for the rest of the year. I will begin with this presentation. First, I, I hear that the cautionary note has been presented by Hung Hoeng. We are the three presenters today. The agenda for us is I take the group H1 2023 results. The first slide that you are seeing today is at a glance.
We had 21.3 million tons of sales volume, marginally lower than the first half of last year. All the numbers that are being presented here is in comparison to the first half of 2022. As you all know, the first half of 2022 for Olam Group was extremely and exceptionally strong, and in light of that, we believe that we have done a very creditable job in terms of the results that we are presenting to you. Our revenues for the first half stood at SGD 25 billion, marginally down by SGD 13 billion, primarily due to reduction in sales volumes, in which I will talk about it in the later slides.
We had an EBIT, which is a key operational metric that we will track and report, at $820 million, up 1.1% compared to the $811 million that we delivered in first half of 2022, translating into an operational PATMI of $184 million. A reduction of 62%, as you all know, primarily on account of significantly higher interest costs due to the rapid increase in interest rates that we witnessed through nine months of 2022, and still some more that as we have seen in the first half of this year as well. Adjusting for one-off exceptional losses, which we had already announced a couple of weeks back, our reported PATMI stood at $48 million.
However, our gearing was flat at 1.74 times compared to 1.73 times this time last year. In terms of us operating group-wise performance, disaggregating the EBIT of $820 million, ofi, Olam Food Ingredients, delivered an EBIT of $277 million. Adjusting for certain adjustments, they delivered a higher $299.7 million, higher than this time last year. Olam Agri, however, had a 9% decline in terms of the EBIT at $559 million against a very strong, exceptional first half that we witnessed in 2022. As explained earlier, our PATMI reduced by 89% to $48 million, and operational PATMI stood at $184 million, a reduction of 62%.
However, our balance sheet continues to remain very strong and resilient, and has been impacted by increase in higher working capital, and this is primarily due to some timing differences that we saw, especially in Olam Agri. Olam Agri, as you know, We have a significant business in South America in terms of our origination and merchandising segment, and there, the crops, especially in the grains and oilseeds, were considerably delayed in Brazil and Argentina, which picked up, as we had predicted in the Q2 of this year. We had significantly ramped up volumes, and that meant that these sales volumes are bunched up towards the end of June, and that resulted in a higher working capital utilization, which we believe is purely a timing issue.
However, the working capital cycle, because of the reason that I talked about, increased marginally, but definitely under control. ofi, in spite of increase in volumes, they had had a very, very tight control on working capital. We have, needless to add, sufficient liquidity of SGD 21.9 billion of headroom that we have with the diversified pools of capital. Thanks to all the bankers here and the continued support, we are in a quite comfortable position as we speak, and the gearing stood at 1.74 times. As you know, adjusting for the Readily Marketable Inventories and secured receivables, our real net debt to equity stood at 0.86 times as at the end of H1 2023.
The board of directors, have the, you know, happy to declare an interim dividend of SGD 0.03 per share, compared to the SGD 0.04 per share in H1 2022. We now look at the volumes more in detail. Volumes, revenue, EBIT and invested capital more in detail, segregated by operating group-wise. No surprises here. Olam Agri continues to dominate the volume share at 89% of the 21.3 million tons that we had done sales volume in first half of 2023, 8% from ofi and 2.8% from the rest of the group. Revenue, following the similar trend line of volumes, roughly 66% or $19 billion by Olam Agri, 31.2% contributed by ofi and the rest by the rest of the group.
EBIT at $820 million, $559 million or 68% was contributed by Olam Agri. 33.8% or $277 million was contributed by ofi in the first half. Minus 2% or -$16 million was contributed by the rest of the group. Again, a very significant positive trajectory compared to a -$72 million that we witnessed in the first half of 2022 for the rest of the group. Invested capital more or less remained flat at $19.8 billion, 57% contributed by ofi, very consistent with the prior years, roughly 30% from Olam Agri, and the remaining 13% from the rest of the group. I earlier talked about the reduction in sales volume of roughly 3%, down from 22.4 million to 21.3 million.
The bulk of this reduction in volumes have come from the trading volumes of the food and feed segment, and the origination and merchandising segment, sub-segment of Olam Agri, roughly 1.2 million tons, and ofi had a marginal decline of 100,000 tons. The rest of the group had higher volumes of 100,000 tons, overall, delivering a 21.3 million tons of sales volume in the first half of 2023. Very steady operational performance, with EBIT at high $820 million in a 1.1% increase compared to the $811 million. Almost everybody went up in terms of ofi delivering a $9 million compared to last year, higher. Olam Agri, again, as I had indicated earlier, against a very strong exceptional first half performance.
For example, all of you may recall that cotton or fiber had delivered an EBITDA of $126 million in H1 2022, which was actually higher than the full year EBITDA for that particular segment. That clearly demonstrates that it was an exceptional outlier event. We believe that if you look at the historical trend of the EBITDA delivery and the profitability and earnings delivery of Olam Agri in the last three years, 2019-2021, we have on average, delivered 55% of our earnings in H1 and 45% in H2. We believe we have come back to this original historical trend in 2023, with 2022 H1 being an outlier, clearly triggered by the Russia-Ukraine conflict that started on February 24, 2022.
The remaining group, as I had highlighted, had delivered, moved from a negative position to a positive position of -SGD 72 million to -SGD 16 million, a positive swing of SGD 55 million, clearly contributed by our palm plantation in Gabon and also our small cooperations in the dairy operations in Russia. As I had earlier indicated, our operational PATMI is significantly lower at SGD 184 million, notwithstanding a very strong EBIT delivery, contributed by, as you can see, a significant increase in net finance cost of SGD 246 million. All of you are aware that the rapid increase in benchmark interest rates started in the Q2 of last year. Bulk of the in-increase in interest rates impact did not impact us in H1 of last year.
Compared to the first half of last year, now, in the first half of 2023, obviously, there is a significant increase in absolute quantum of increase in interest costs. However, as you know, bulk of our businesses where we are able to pass on the increase in interest rates, especially in working capital, to our increase in sales price, albeit at a lag. With that, we have been able to deliver SGD 184 million of operational PATMI, and adjusting for the one-off exceptional losses, primarily the almond orchards in Australia, the yield loss that we had guided you with a public announcement a few weeks back, our reported PATMI stood at SGD 48 million for the first half. As indicated earlier, our invested capital remains unchanged at SGD 19.9 billion.
We had an increase in working capital, primarily through the timing differences that I talked about, especially in the Olam Agri operating group. However, that's offset by a reduction in fixed capital in the overall portfolio at SGD 9.8 billion compared to SGD 10.3 billion. Combination of divestments that we had done through the second half of last year, as well as some foreign currency impact, due to the significant devaluation of Nigerian naira against the U.S. dollar. Our gearing stood at flat at 1.74 times compared to 1.73 times this time last year, and adjusting for Readily Marketable Inventories and secured receivables, our real net debt to equity stood at 0.86 times.
We had a free cash flow of -$4.453 million, primarily on account of increase in working capital that I talked about. Otherwise, we had a very healthy operating cash flow generation in H1 of this year. After servicing a significant interest cost of $254 million, we had a negative -$484 million of free cash flow to equity in H1 of this year.
Thanks to all of you, the bankers here, we have a very strong-- continue to have very strong liquidity position, close to $3.4 billion of cash and short-term fixed deposits, $5.6 billion of Readily Marketable Inventories, around $800 million of secured receivables, and more importantly, close to $12 billion of unutilized bank lines, all adding up to close to $22 billion of total borrowings for headroom that we have. Looking at the overall gross borrowings of $16 billion that we have as at the end of June 2023, a very healthy $6 billion of headroom that we have as a portfolio. With that, I will hand over to Shekhar to talk about the performance, business performance of Olam Food Ingredients. Thank you.
Thanks, Muthu, let me extend my warm welcome to all of you. We are even more pleased with your support because you're spending this time with us on a Friday evening, so thank you once again. I'm here to share the operating results for ofi. I will also talk about the one-off almond loss that we had announced earlier. On the operating results, we are very pleased with the first half. You will see that there is a 3.5% EBIT growth, but it tells a story of two things. One, last year, our Global Sourcing had an exceptional first half, and you'll see a reduction, but that reduction is actually below what we anticipated.
In a sense, Global Sourcing has performed well, even though you see a reduction compared to last year. It's on the back of a very strong performance across multiple platforms, coffee, dairy, cocoa, all had exceptional starts in the first half of the year. What we are more pleased with is the performance of the Ingredients & Solutions, which is where, as you know, we have invested in and are continuing to invest in. We are seeing a very smart rebound from, again, a business that was hit immediately after the impact of the war and energy prices increase, et cetera. That has had a very smart rebound. Pricing changes have happened with the customers, and you can see the EBIT trajectory, which is very pleasing.
Therefore, this overall improvement of 3.5% EBIT is on the back of a roughly 19% drop in Global Sourcing, but which was against a very strong first half and a very sharp correction in Ingredients & Solutions, which is where the higher margin, higher return part of ofi's portfolio is growing. Another part that you'll see on the graph on the left, which I'd like to call out, last year, because of the differences between Global Sourcing and INS that I just called out, it had almost a 50/50 share in the EBIT.
Now you will see that it's a kind of a 65%, 35% share between IS and GS, which is also the direction of travel that we have signaled, and that's what you should expect to see going forward, in terms of the EBIT split, and again, being a higher margin and higher return, part of the business. Again, many of you here who look at our capital efficiency very closely, and like Muthu was pointing out earlier, we have managed the EBIT growth, with a very strong focus on managing our operating cycle times, our invested capital.
While we have some expansion in our fixed capital based on the committed investment that we had made, the working capital has been managed very efficiently, and that can be seen in the split of the fixed capital, working capital. This, as many of you who track our markets, in the ofi portfolio, we have cocoa and coffee, which has seen some tremendous high, high prices, especially on the London market, where both cocoa and coffee are, in this year, have seen an increase of over 40% each. Despite that, this management of working capital, the increase in EBIT, the focus on ingredients and solutions, is a very pleasing result for the operating result for the first half.
Looking at it with a little bit more detail between the various segments and the, and the products within the segment. If you look at the Global Sourcing, like I mentioned, last year, we had the dairy business, the coffee business, and the cocoa Global Sourcing business off to a very, very good start. That's corrected itself. This year, those out of those businesses, we still see cocoa performing very well, coffee performing very well. It was a bit of a slower start in Q1, but has picked up smartly in Q2. Dairy is the only place where Global Sourcing has seen some knock-on effects of China, where the demand has been. The reopening or the expected demand increase from reopening has been much more subdued than was initially expected.
That is dragging down some of the volume and EBIT impact for the first half. Nuts and spices have seen some impact of lower demand or destocking or a mix of both in the U.S., and you see some impact of that. A lot of that is also in the Ingredients & Solutions segment, not so much in the Global Sourcing for those two products. Overall, if we look at how this business has managed its capital or this part of the business across our five platforms has managed, has been again, quite. While there's been a reduction of EBIT, it's had a very sharp reduction.
The 18% reduction in capital is after the high prices that we are seeing in cocoa and coffee, is after a 5% on just a 5% reduction in volume. The operational efficiencies have been very, very strongly pushed in these businesses, so we feel very pleased. An important thing, which I underline every time, that our business and ofi's future strategy is based on a very strong foundation of the Global Sourcing, our sustainable, traceable, integrated business. On top of which, we are building a value-added business, whether it's in value-added ingredients or private label.
The Global Sourcing remains a very, very important part of our business, and will remain a business that we are probably not investing more in, in terms of capital, but it's a place where we are investing heavily in, in deepening our origination capacity, in deepening our digitization capacity, in deepening the sustainability impact, which is the basis on which we are winning in the value-added segment and the Ingredients & Solutions segment. Moving on, I want to spend a couple of minutes on the almond impact, which is a one-off, non-recurring and a fairly unprecedented situation that we have seen in the Australian harvest. As you know, we have a very large presence in the almond orchards in Australia, and we are the largest grower and have a large market share in Australia.
Across all growing regions, we had a major impact on yield. Obviously, in our business, in the agricultural business, yield going up and down is par for the course, and that is business as usual. You had a situation here that despite us seeing fruit on trees, post-harvesting, us looking at the nut count and the, as just before harvest, not just us in, in our, surveys that we do, regularly at the same point of time every year. Even the industry estimates, and the Almond Board of Australia does these estimates just before harvest in January, nobody, really, looked at a yield reduction or...
But as the harvest started flowing in, and different varieties started getting harvested, and they all happened at different points of time for different growing areas, we saw an unprecedented, almost, 35%-40% reduction in yield. A lot of now, what we are building back is conjecture, because the industry, whether in Australia or U.S., has never seen an impact of this kind. This is truly an unprecedented impact. Now as we put pieces together, it is probably a combination of pollination intensity because of lower amount of bees available, which was way back in August. We also had known that.
After that, when the fruit started forming on the trees in October, and between October and January, when all the nut counts, and we had done multiple nut counts during that period, we had thought that that pollination intensity would not have had an impact. That has perhaps It was a wet and a cold summer in Australia between December and January or November to January. The combination of the lower pollination intensity, as well as the cold in the growing period thereafter, it, it is now believed that that combination, which has been a fairly unprecedented combination, has created that impact for the yield for last year. It has not impacted, and the biggest question in our minds, and probably in your minds, would be that, has it impacted the long-term tree health?
We believe it's not, and we have done, again, multiple surveys, pre-harvest, post-harvest, and the shoots after the harvest, which is the first indication of the tree health, is looking good. Of course, there is a long time between now and the next harvest, which will be next March, and there'll be multiple times we'll be looking at a more intensive survey. At this point in time, based on our own internal teams, external surveys we have got done from experts, both from Australia and the U.S., as well as what the industry has done and other growers have done, we believe that there's no long-term impact to tree health, and this is a one-off, very material, but one-off non-recurring, yield impact.
Which is why we decided to announce that ahead as soon as we were clear that that roughly about 75% of the crop which has been harvested, has been processed. There could be some changes to the final volume and sales and sales prices, but we believe that it won't be a material difference to this number, and hence decided that that was important to call out in advance. I'd be happy to take any questions in the Q&A, but just wanted to give you some flavor of why this happened, what's our assessment of the long-term impact, and how we are also going to manage this even more closely going forward.
With that, moving on to the last part, which is what I wanted to really look through the ingredient and solution part of the business, and I highlighted that it's almost a 24% growth in EBIT. Albeit there was an impact of energy cost increases in Europe, et cetera, last year in the first half. Net of that, when we look at the, it's, this EBIT growth is on almost flat volumes, higher pricing and a much higher EBIT per ton. That really gives us the confidence, and that is the important parts to highlight, that all the cost increases, inflation increases, we've been able to pass on. There is therefore, on the same volume, a higher EBIT per ton and a higher revenue, both of which have resulted in this EBIT.
We believe these EBIT per ton are sustainable, and therefore, as some of the newer plants we have commissioned, that we'll be commissioning the dairy processing plant in New Zealand. We have just commissioned one part of the soluble coffee facility in Brazil. We are looking at commissioning the second half or Q1 , the nuts facility in the U.S. When all these plants come on stream and the capacity and there'll be EBIT growth at a higher margin and a higher return on capital. We feel very happy with the growth, happy with the portfolio shape between Ingredients & Solutions and Global Sourcing.
Again, I'd like to call out that the global sourcing remains the benchmark, the, the foundation on top of which we are building a very strong, differentiated, value-added ingredients business, which is the future for ofi. With that, I'll hand over to Sunny, take over for the rest of the group.
Thank you, Shekhar. Before I get into a deep dive of the Olam Agri results and financials, let me just set a context and backdrop explaining those results. I think I want to just point out six or seven things that happened in the first half of the year. The first is very tough macroeconomic conditions. While inflation has consistently come down over the last six, seven months, it's still sticky, and as a result, the Fed has continued to increase interest rates. We believe they have reached a restrictive level of interest rates, probably one or two more hikes, but unlikely any rate reduction this year. Interest costs has a significant impact on the Olam Group's business, whether it's ofi, Olam Agri, or the remaining Olam Group.
Again, SGD 254 million of interest expenses last year. This year, we have had SGD 508 million, so almost a 100% increase in interest costs and expenses. Some of it we can pass through, particularly on the working capital. On the fixed assets investments, it is more difficult to pass through unless you're repricing your contracts. Both ofi and Olam Agri have a forward book of between three to six months in Olam Agri, nine to 12 months in the case of ofi. It is only in the next repricing cycle that those costs can be passed through. Second, accompanied with higher interest costs has also been tightening financial conditions.
While it has not impacted a company like Olam Group, but for the market and for players in the industry, tightening financial conditions, including some of the distress that some of the banks in the U.S. came about and the effect that had, resulted in tightened financial conditions. The second is tough trading conditions in the food and agri business side, not so much in the ofi side, particularly in one of our three subsegments. We have an origination and merchandising segment, which is a global trading business, and we have a processing and value-added business, and then we have a fiber, agri, industrial, and ag services business. Typically, the trading business does well when markets are trending. This year, we had the opposite of that. We had completely untrending markets.
When I say trending conditions, means on price, on basis, on structure, on arb, on whether the markets are in carry or backwardated. The global agri business and commodity sector had very untrending markets, which makes it a little bit more challenging to trade under those conditions. That was the second thing that is relevant. The third is the geopolitical tensions and its implications, particularly the Russia-Ukraine war. As a result of the cessation of the export corridor out of Ukraine, which Russia and Ukraine and the UN and Turkey had put in place, expired, and the Russians are playing hardball and not allowing the extension of that contract. The ports in Odessa, and particularly the backup option that Ukraine had of shipping through the Danube River, both are under attack, and therefore, that flows have reduced.
Muthu explained to you when he showed the volumes decline. In the Olam Agri business, we had a 1.18 million tons drop in volume, almost entirely as a result of lower volumes available from the Russian corridor, which at an average EBIT margin of $29 a ton that we made in the first half, has a significant impact on the decline in EBIT overall for the Olam Agri business. That's the third thing. The fourth is we have continuing food security issues, and as a consequence of reacting to the food security issues, governments across the board have started imposing regulatory measures. India has banned now the export of non-basmati and non-parboiled rice. All white rice, all grades of white rice has been banned. The total global demand or trade of white rice is 25 million tons.
That is 25%, and India contributes to 41% of the global trade in white rice. This is just one example. More than 70 countries around the world have imposed new regulatory restrictions in order to protect their domestic markets against food security and food price inflation. These are precisely the wrong policy moves, but it is understandable why governments would do that to protect their domestic markets from food security challenges. The fifth thing is really about weather, and you can't open a newspaper or switch on TV without hearing that the world is coming to an end. Right? Fires and storms, and floods, and utter destruction and devastation. We've had the hottest year in record in history, and it'll continue to get hotter for the rest of the year.
This is before factoring in the El Niño development and the potential impact of El Niño on crop prospects. This Tuesday, the USDA in the U.S., said that the U.S. cotton crop is being significantly impacted by dry weather, particularly in Texas, which is a large place for growing cotton in the U.S. They have put the health of the cotton crop this week at roughly 31% of the cotton crop planted in the U.S. being in good and excellent condition. This is the lowest rating that we have had in 12 years. We've not seen such poor crop, the way back that we saw that was in 2011. That's an example of the impact of weather on what the prospects of this crop is.
On the demand side, we see China has not really come back as we'd have all expected since they withdrew the zero COVID policy. Demand is still a bit lackluster. It will improve, we hope, but at this point in time, it's still lackluster. Finally, there is this whole big wave of industry consolidation with the acquisition of Glencore Viterra by Bunge, which is a massive deal and will impact competition and trade flows. It's positive for the industry. It's created a lot of excitement. I want you to just keep this in mind when I talk about the Olam Agri results. When you talk about the Olam Agri results, overall, for the first half, we have had a decline in EBIT operating profit of 9%, which is roughly about. Sorry, look at the screen. Yeah.
Which is roughly about $55 million lower than the first half of last year. However, if you see our margins, EBIT per ton, it has been steady, $29 this year per ton, compared to $30 last year per ton. Most of this decline in operating profit is a result of the lower volumes from Ukraine in the first half. Invested capital has gone up, and Muthu has already explained why the invested capital has gone up, so I won't repeat that. Within Olam Agri, there are three broad segments. The first one is what we call the origination and merchandising segment, and as I told you about the trading conditions and non-trending markets, this segment has underperformed in the first half. It is underperformed by EBIT declining 25% from $230 million last year to $172 million.
That's a drop of $58 million. Margins have also declined by $3 a ton from $14 last year to about $11 this year. This is all now compared to last year, but this year's performance for us, even in this segment, is better than what we planned for and what we budgeted for. Last year was an exceptional first half for us in Olam Agri. Last year, Olam Agri, in the first half, delivered 82% of its profits. Against the historic seasonality or earnings distribution between H1 and H2, which was typically 50%-55% happens in the first half, 45%-50% in Olam Agri's case happens in the second half. Last year, 82% of our profits came in the first half.
Against a very strong first half, it's a material decline, but it is better than what we had budgeted for, or hoped for, or planned for, and it is back to our historical phasing of earnings between H1 and H2. We are not too bothered about this because we feel we are on track, as a result of this, to deliver a reasonable H2 and therefore, a full year results that is better than the trend that we have seen in the first half in this particular segment. The other segment which compensated for this drop in operating profit in the origination and merchandising segment is the processing and value-added segment. That story is very different.
There we had $106 million growth in EBIT in the first half compared to last year, which is a 61% increase in operating profits. Most importantly, it is a significant increase in margin per ton. Against $85 per ton margin last year, this year it is 66% higher at $141 per ton. And we believe that this will continue to perform strongly in the second half as well. If you move to our final segment, which is a fiber, agri, industrial, and ag services segment. In that segment, we had underperformance in the cotton business, largely on account of slower demand in China, as well as Pakistan, Bangladesh, and the Indian subcontinent, which is now the prime driver for cotton demand and textile demand.
Pakistan had issues with its currency and its ability to open LCs, and the same thing happened in Bangladesh in terms of availability of foreign exchange and its capacity to open LCs. Turkey had a massive earthquake, which is a huge market for cotton fiber and textile milling industry. All of that has combined for an underperformance in our fiber business in the first half. We also had an underperformance in our quantitative fund business in the first half as a result of market volatility and the fact that, as I mentioned earlier, markets were not trending. We have had very strong performance within this segment in our wood business and in our rubber business.
In the wood business, in particular, FSC-certified tropical lumber and wood products are in a real short supply, significant pricing power and premiums, and the same thing is happening in our rubber processing and value-added business. Having said this, in terms of the first half performance, we are cautiously optimistic about our prospects for the second half. More importantly, we think the distribution of earnings between H1 and H2 will be more in line with and in sync with historical seasonality of H1 and H2, barring a strong first half in 2022. With that, I want to move to the rest of the group. The rest of the group, as you know, has got three constituent parts.
One is Nupo, which is our ventures platform, leveraging digital and sustainability capabilities to launch new products and solutions that solve fundamental problems in the food and ag sector. We have Mindsprint, which is our legacy erstwhile Olam Technology and Business Services function, which is our IT business. Which we have now carved out as a separate company called Mindsprint. In addition to providing captive services to the Olam Group companies, ofi and Olam Agri, and the remaining Olam Group, it's now got the mandate to develop third-party business and has got off to a very good start, of already winning in the first six months, three new customers and meaningful size customers for third-party services, in terms of technology services.
We have the remaining Olam Global Holdco, which is warehousing our gestating assets and our exit assets. The remaining Olam Group has had significantly better performance than last year. Last year, first half, we had an operating profit loss of $72 million. Against that, this year it is reduced to $17 million. Significant narrowing of losses in the remaining Olam Group compared to last year, with also a meaningful reduction of about $561 million in invested capital in this business as we are selling our assets, particularly the ARISE Integrated Industrial Platforms business, which we sold, and the ARISE Infrastructure Services business that we sold. Have all resulted in reducing our invested capital in that business by about 17.5% during this period.
With that, I want to quickly round up in terms of business outlook and prospects. Shekhar has already mentioned, as far as the ofi business is concerned, a good first half, growth in EBIT, led by the Ingredients & Solutions business. He spoke at some length on the prospects for this business in the second half. We expect to continue the momentum that was there in the first half for the second half and the full year, as far as the ofi business is concerned. Olam Agri, I've already outlined to you the prospects about our optimism for the second half and for the full year, particularly in line of belief that we are back to the historical average seasonality.
We will continue to make progress in narrowing and reducing our losses in the Remaining Olam Group as we invest in new opportunities in both the ventures platform as well as the OTBS platform. With that, I want to move on to my last two slides. This one is on the reorganization of Olam and the progress there done. So we are continuing to target the concurrent listing of Olam Agri on the main board of the Singapore Stock Exchange, as well as Saudi Arabia, the Tadawul, at the earliest practical opportunity. Now, we are still awaiting regulatory approvals, and we now believe that this IPO, we will target to launch in the first half of next year.
We are, however, very encouraged by the investor response that we got, because as all of you know, we were targeting that IPO by June of this year. We have to get all the regulatory approvals before we can launch it. Given that this is the first of its kind listing in Saudi Arabia, of a foreign company listing in Saudi Arabia, more importantly, first Saudi Depository Receipt to be issued and first cross-listing between Singapore and Saudi Arabia. There's a lot of work that needs to be done to make sure that the instruments are fungible between the Depository Receipt and the common ordinary share in Singapore, and all of the associated stuff that needs to be done to make it possible to conduct this listing.
Given where we are now, we have got constructive engagement with the regulators, and we are pleased with the progress that we are making. Once we get all the necessary approvals, we will then be in a position to target to launch the Olam Agri IPO in the first half of 2024, by the Q2 of 2024. ofi continues to be on track to list sequentially thereafter, after the Olam Agri IPO, in London as the primary listing venue and Singapore as a secondary listing venue, and that is also on track. As far as the remaining Olam Group is concerned, after these two listings and demerger, we will have the remaining Olam Group continue to remain listed on the Singapore Stock Exchange.
That is an update as far as our IPO plans are concerned, and with that, I will summarize the three key takeaways. Firstly, we believe that our carve-out, separation, and reorganization plan is working, as ofi and Olam Agri both capture opportunities that were not visible to us when we were one group. We will build on the financial results that we generated in the first half for Olam Agri, and we expect the second half to be in line with historical seasonality of earnings in these two businesses. ofi is cautiously optimistic about its prospects for the second half and therefore for the full year. We are now planning the Olam Agri IPO in the first half, and then sequentially thereafter, we will do the ofi IPO.
Overall, as a group, we remain cautiously optimistic about our prospects for the second half. With that, we are happy to open the floor to questions, and I hand it back over to Hung Hoeng.
Thank you, Sunny. Thank you, Shekhar and Muthu, for your presentation. Yes, we do have questions, waiting at the floor. Can you please, go to the microphone stand, and, or get a mic from one of my colleagues there, and let us know who you represent, and your name, please. Thank you.
Hi, good evening. Well, there are feedback. Hi, good evening, Alfred from Bloomberg News. The first question is, the company sees cautious optimistic outlook for the operation for the full year. How could it happen, or impact the valuation or the IPO progress for the next year? Better? My first question is, so how the low profitability, if it persists, impact the Olam's valuation in the IPO for the next year? Yeah, for the first half.
Yeah.
And then-
We expect to do the IPO in the first half of next year. We told you that we are cautiously optimistic about the second half. We believe that we will go back to the historical seasonality of 55%, 45% between first half and second half that you are seeing as an average over the period 2019-2021. If that is true, then we should have reasonably strong earnings on the back of which we can do a successful IPO without any impact on our valuation, a positive impact on our valuation. Given what is happening in the industry and the scarcity of such assets, given the consolidation that is happening with Bunge's acquisition of Glencore Viterra, our early engagement with our investors all point to the fact that there's a lot of excitement about this IPO.
Thank you. My second question is, do you see magnificent hit?
Sorry?
Do you, do you expect magnificent hit in rice trading, from the India's rice export ban?
Muthu, I don't know, mentioned we had a very strong first half in rice, and we expect that to continue in the second half. Despite the fact that there will be reduced volumes out of India, there would be, hopefully, compensating volumes out of the other exporting regions, which includes Thailand, Vietnam, Myanmar, China. We don't... We believe that we will have a good year in rice this year because margins are also expanding as a result of this ban.
Thank you.
The lady in green. Oh, second.
Hi, this is Anuradha from IFR. Are there any plans to IPO Mindsprint and Nupo Ventures? I know they're still in a very early stage. Is there any timetable or any plan for that?
In phase one, in phase one, we are looking to bring in strategic investors that can take both Mindsprint and Nupo to full potential. We haven't started a process as yet, but at some point in time, in the next 12-18 months, we will start a process of looking to bring in strategic investors who can help us take both Nupo Ventures and Mindsprint to its full potential. As far as Nupo Ventures is concerned, we will look to bringing in strategic partners at the platform level, that is the incubator or the foundry level, but we are also looking to bring in investors at the initiative level. Terrascope is one of the initiatives, Jiva is one of the initiatives, SustainEd and RE, these are the various ventures that have been launched so far.
While we will look for strategic partners at the platform level, we will also look for investors and partners at the initiative level. Eventually, those boards and those investors and partnerships that we form will make determinations as to when and if they should be eventually public or listed.
Hello, this is Aanchal from Westpac. I just wanted to ask, what impact do you see or expect from the Bunge-Viterra merger? Thank you.
Firstly, we think it's a good deal for Bunge. We believe that it is also a fairly priced deal. As you know, the deal structure is $6 billion in cash and... Sorry, $6 billion in shares and $2 billion in cash. Post the announcement, given how Bunge share prices have reacted, I think Viterra's shareholders and Glencore shareholders will be feeling more pleased. I think it's a win-win deal, and I think it's a positive deal. I think it will consolidate the industry and probably help and enable a better margin environment going forward. We welcome the transaction.
If there are no questions from the floor, I will open up the time to take on a few.
Thank you for the opportunity. This is Peggy from Phillip Securities. Can I ask what drives your margin per volume? Because from what my analysis of it, it doesn't seems to... When price goes up, it doesn't seems to benefit you in a proportionate way. What are the factors that could drive your in terms of your margin per volume, in terms of like what changes can-
Yeah, price as, as you know, if you've been attending our results briefing, you know that price has no impact on our margins or very limited impact on our margins. It has some impact on our working capital and invested capital. If prices are higher, we have higher invested capital, and therefore, returns could be impacted. In both ofi and Olam Agri, we are trying to make a spread between how we buy and the costs associated with buying, to how we sell and to whom we sell, and we want to capture that spread. That spread can be sticky across a wide range of pricing environments, depending on how well you are differentiated in that business, and therefore, what kind of pricing power you have.
There is no direct correlation between high prices and high margins, and low prices and low margins, in either the ofi business or the Olam Agri business.
Exception would be the farming business, where-
Yeah
... obviously, price has a direct impact. But otherwise, price is not what we are shooting for. We are shooting for that spread, EBIT per ton. And volume times EBIT per ton is really where we are looking at the growth in margin.
Thank you very much. Thank you.
We move on to some questions that's come online. In particular, the questions is from Olam Agri. Would the company be able to quantify the drop in trading volumes and group revenues, on account of the Ukraine grain export passage deal or the end of it? The second question is, in management opinion, what's the largest headwind for Olam Group for the next two years? Let's take these two questions first.
Yeah. On the first one, Olam Agri overall has had a reduction in volume in the first half of 1.1 million tons. A large chunk of that is because of lower volumes from Ukraine. On the second, on terms of what are the headwinds we expect when?
Yeah, largest headwinds for Olam Group over the next two years.
Over the next two years. Okay. I think the six or seven factors that I talked to you about, Olam Group's performance is a function of, A, good trading conditions, B, good, macro conditions and macro backdrop, C, stable geopolitics, four, weather and, ag, seasonalities. Fifth... Those are the factors that will impact our business. None of us know exactly how they're going to track over the next two years. We have to have a diversified portfolio that will allow us to navigate across these, macro, across these various drivers. I think both Olam Agri and ofi... ofi, even more so because it's a more value-added business, is not going to be affected so much by trading conditions.
It will be affected by macroeconomic conditions, won't be so much affected by geopolitics as Olam Agri would. Across the portfolio between the three groups, ofi, Olam Agri, and the remaining Olam Group, we think we have a well-balanced, well-diversified portfolio that will allow us to navigate these dynamics better. Very difficult today to predict what will happen two years from now on these matters, if the Fed does not know whether inflation will be. Everybody is data dependent, right? We are also, we are also data dependent. Nobody knows exactly what's going to happen.
The third question is also about management expectation for 2023 results. We can comment for ofi, Olam Agri, and also for the remaining group, in terms of whether the volumes and revenues will be better or worse than the year before.
I've already spoken about Olam Agri. We expect EBIT and EBITDA to grow over last year based on this historical seasonality. I've also spoken about the remaining Olam Group, where already in the first half, we significantly narrowed EBIT losses compared to last year, and we expect that trend to continue. I'll leave it to Shekhar to talk about ofi's second half and full year prospects.
To the specifics of guidance, we don't specifically guide either volume or EBIT growth specifically, but ofi has provided guidance in the past of looking at a low to mid-single-digit volume growth and a mid to high single-digit EBIT growth. We feel fairly confident about meeting those over the medium term, and feel cautiously optimistic about H2. Primarily because we have invested for it in advance, and therefore, the growth in capacity, the growth in margins, that's naturally should happen. We hope that that will give us the growth that we are expecting. Obviously, there are, there are macroeconomic conditions, and we talked about it. There had been the tailwinds.
We'll know only when it happens, but there is certainly some amount of concern on the destocking and consumer demand in some markets, especially U.S. and China, et cetera. That's something to look out for. At a business level, with the customer that we have, with the capacity that we have built and the capability that we have built, we feel quite confident about the business moving, going forward.
This question is from Muthu. How would management address the sudden spike in net debt ratios?
Gearing ratios.
Yeah.
So primarily, as you know, as Olam Group today and post the reorganization, we have a more nuanced approach towards gearing. ofi, for example, is more asset-intense and relatively less working capital-intense in as part of the businesses. Whereas, Olam Agri is more working capital-intense and less fixed capital-intense. From that perspective, our outlook on how to structure the capital, the debt capital structure for these operating groups, are more nuanced now, rather than looking at it holistically as we used to do pre-reorganization as Olam Group. In our endeavor, obviously, bulk of this, today, we are looking at the gearing to be in line with the overall Olam Group guidance, which has been historically, we have told about net debt to equity basic at 2 times.
However, we have repeatedly over time, have talked about our real net debtedness has to be weighted in terms of looking at adjusting for readily marketable inventories and secured receivables, as we had always guided in the past. It is relatively more pronounced for Olam Agri in today because of the way we have split. One has to look at the gearing basis, the nature of the business that is there. If you are more working capital intense, and most of our working capital is inventory dependent, for example, again, 85% of our working capital roughly is in inventory, and 75% of this 85% on average, is readily marketable inventories. When we say RMI, these are liquid hedged or forward contracted inventories, which can be liquidated within 90 days without any reduction in sales price or margin. Right.
These are very strict boundary conditions, and as you all know, some of these rating agencies, like S&P and Moody's, also give RMI credits, especially in companies who are in the Olam Agri space. Those are all clearly guides us in terms of how to look at gearing for ofi separately, Olam Agri separately, and the rest of the group. The rest of the group clearly is more fixed capital intense and very, very marginal working capital. That's how we are looking at the portfolio in terms of our gearing outlook.
Two follow-up questions on that. The first question is: how would you guide in terms of the average interest cost that's going to happen for the second half and also for the full year? That's the first one. The second one, on the flip side, is on the availability of liquidity and capital from the banks. Can you indicate what percentage may be a committed percentage?
First of all, I would probably take the second question first. I had, during my presentation, I had presented the ample liquidity position of SGD 21.9 billion that we have, as at the end of first half. Historically, and even now, we have never faced, thanks to real support from the bankers and other debt capital market participants, that we have always had access to all types of funding, regardless of whether we are rated or not. First, I don't think we have any liquidity issues or liquidity concerns even going forward. Second, in terms of the interest rates, I think we have seen bulk of the interest rate increases already.
As Sunny was alluding to, one would not able to predict what Fed will do going forward, but we believe, considering the way the inflation is coming down and quite consistently in the last six, seven months, there is probably more indication that Fed may be less hawkish and allow the interest rates to probably settle down and have the inflation have a soft landing, rather than having a recession or a deep recession. But that is our view at this stage, and we have to wait and watch. Interest rates for us in the rest of the year will remain elevated, which were at roughly 6.8%-7% that you have seen, and that is what we are looking out for and forecasting for the rest of the year.
Thank you, Muthu. Any questions from the floor before I move on to, second set of questions?
Testing. Hi. Hi, this is Yuen Fan from CGS-CIMB. I'm just wanted to check a follow-up on the interest, interest cost question. Because I understand that, you know, talking about how the trading is usually a spread, and this should actually cater for the interest cost increase. Do we expect the increase in interest costs to actually flow into your EBIT margins, the increased EBIT margins moving forward, and is there any lag time to observe this phenomenon going forward?
That's a natural sequence, and I think it was said earlier that we would expect the working capital to be costed in, into repricing going forward, and that is a normal cycle that happens. What we have to contend with right now, and everybody in the market, it's not just us, is this rapid increase in the last 12 months. If you got contracted volumes for six to nine months or three to six months for Olam Agri, and six to nine months, sometimes over 12-18 months with some of our contracts, then you can't reprice interest. You'll have to for that next cycle of repricing is when the current interest rates will be priced in.
We have been seeing that, that over the last 18 months of this interest rate cycle, except that there's been a single, longest trend of interest rate increases on a consistent basis. We have been repricing it every, every new contract, we've been repricing it, but we are all kind of, that until the cycle. Today it seems to be slowing down. I won't hazard a guess whether it will stop here, but seems to be certainly slowing down or coming towards the end, and maybe some reduction is possible in the future. We feel quite confident that we'll be able to pass on the interest rates for the working capital. Fixed capital is a little bit more about what are the value add coming out of that fixed capital and how you price that.
That's a slightly different. It's not one for one. We feel quite optimistic that, if interest rates stay where they are or go up or go down, our EBIT margins will follow suit over a period of time. We need some stability for that to reflect in our consistent margin.
In a sense, what we are observing for the EBIT margins today have the room to grow, should we be how, how we are looking at things?
You can put words into my mouth, but what I'm saying is, yes, we would expect to pass, because that's a. There is always market-based pricing. If the interest cost is the same for everybody and all market participants of our size and scope, we'd expect that that will be priced into the market, and therefore that will result in increased margins or lower margins, depending on where the interest rates are.
In terms of outlook for the second half, are we seeing positivity in terms of margins, or is it, is it a function of just margins alone, or are we looking at volumes to improve as well? I mean, given your visibility into the market, yeah?
I can speak about ofi. I think it'll be really more about margins than volumes, quite clearly. It's not that there's no volume growth likely, but we- our volume growth, in the ofi business, because the nature of the business is not, is going to be low to single, medium single digits. It's that kind of a growth. It won't be 10%, 20%. The real growth is going to come from the fact that we are indicating that we'll have a high single-digit margin growth for a low single-digit volume growth, shows that it's margin expansion we are focused on, and not volume growth per se. We'll see that for ofi for sure. Ask Sunny to comment on OGM.
Yeah, not very different. I think when the Ukraine corridor will open is difficult question to answer. That could continue to impact volumes from that region. Will we be able to make up those loss of volumes from the Ukraine corridor in other places? It is possible that we can, but we don't see significant upside to volume growth. We see, however, potential recovery of margins, and that is a good point that you have made. If you look at the origination and merchandising business, one of the 3 sub-segments in Olam Agri, in 2019, 2020 and 2021, we had EBIT per ton of $6-$8 a ton. Last year, we had EBIT per ton of $14. This year, we've had $11.
The reason why last year's margins went up to 14% is partially driven by higher interest costs per ton. If you have higher interest costs per ton, then you need to recover that higher interest cost per ton by having a higher EBIT margin. That is typically what we have observed so far, and we think that pattern will continue.
Thank you. That's all I have.
If there are no questions from the floor, I'll take on some questions from the webcast. There are a few questions relating to the reorganization plan, in particular, the two IPOs that we talked about today. Essentially, there are a lot of questions relating to what the process involves. Perhaps, Sunny, you can comment on the process that is involved to get Olam Agri listed, as well as ofi listed.
Firstly, we need regulatory approvals, and since we are planning a dual listing between Singapore and Saudi, and because we have very strong investor interest from Saudi, our base case is we want to do a dual concurrent IPO. That is what will serve our interests best. From a valuation standpoint, from a liquidity standpoint, from an aftermarket performance standpoint, we want to pursue a concurrent dual IPO. We have to be patient, given that this is the first foreign company to list there and first SDR, et cetera, that all the necessary approvals are obtained. The first step is to obtain those approvals. As I mentioned in my earlier comments, we are constructively engaging with the authorities in the relevant jurisdictions, and we feel confident that good progress is being made. That's the first step.
Once we get that, then we can start the clock in terms of doing a IPO. We would do that IPO, and there is a process for that IPO. First, we have to submit a circular, which we had already done for Olam Agri and ofi, to get permission from our shareholders to list Olam Agri. The approval that we got from the shareholders will not now be valid because we couldn't do the IPO as planned in the first half of this year, because the regulatory approvals were not in place. The second thing is to get the shareholder approval. We have to get a court approval and a court judgment on that process. We have to apply to the relevant regulators in both exchanges with that updated circular, updated financials.
They typically take four to six weeks to process that application. We have to get the connected analyst to issue the research report immediately after we get the approvals or eligibility to list from both the exchanges. Once the analyst reports are published, after a certain gap, they can start doing the pre-deal investor education. There is a certain, about two weeks for the pre-deal investor education, where our analysts, connected analysts will go and meet 400-500 potential investors and talk to them about Olam Agri. We will also simultaneously do our cornerstone investor roadshow, which we have done already. That process will have to be completed, and then we can launch the IPO.
That process typically takes a certain amount of time to get done, but the starting point for all of that is getting the necessary approvals from all the jurisdictions.
The second question is relating to the-
We don't want to do both IPOs at the same time. We want to do these IPOs with some gap between them, because we don't want investors to be forced to make a choice if they have SGD 100 to invest, how much they want to put in Olam Agri and how much they want to put in OFI. At each point in time, we'll give them one option to invest, and therefore, there will be some gap between the two IPOs as originally researched.
There are a few questions in relation to the timeline that we have indicated to list Olam Agri by first half of 2024. Does it assume the reopening and rebound of China growth and the end of the Russia-Ukraine war? Is there any flexibility to have the IPO earlier than the first half of 2024?
First, we think we can do an IPO today if all our approvals, et cetera, were in place. We believe current macroeconomic conditions are more positive than what they were in March, because as I've mentioned, interest rates are beginning to come down. The Fed has reached a restrictive level of interest rate hikes and everything else. There is a notion that probably we could engineer a softish landing rather than a deep recession or a technical recession at worst. There is a revival of the IPO markets. Already 25 IPOs have been done this year. In terms of number of deals, in Europe, it is up by 34% compared to last year. In ASEAN, it is up by 32% compared to last year. In the U.S. as well, it's up. Number of deals is up.
After market performance and the deals done in the last quarter have been solid. In Saudi Exchange, where is one of the target areas we are trying to list, 3 listings have happened this year. One is trading at 108% above the listing price, the other is trading at about 56% above the listing price, and the third is also trading at about 40% above the listing price. Markets are beginning to slowly come back. We are not waiting to do an IPO in June because we believe market conditions will be substantially better then. We cannot do an IPO till all the approvals are in place, and we go through this process. It all takes six, seven months.
Therefore, we think a realistic timeframe for us to now target the IPOs, complete our full year, deliver those results that we expect to deliver, get all the approvals in place, and have the time that we need to launch a successful IPO at a good valuation and potentially, good after-market performance.
Yes, Sunny. There's one question regarding the Remaining Olam Group. Would you want to talk about the possibility of any divestments that's going to happen and what market conditions are there for these divestments to take place?
Yeah, we expect some of the assets in OGH, which have been marked for exit, we expect at least three of those divestments to happen in the second half. We'll wait and see how that pans out, but we feel reasonably confident that three assets out of the six or seven assets we have under the exit bucket will complete before the end of this year.
There's a question on the partnership with SALIC. Would you be able to provide any updates on the partnership with SALIC and any capacity expansion initiatives, as well as plans for importing products into Saudi, and any magnitude of this contribution that is going to take place in H2, or how much has already taken place in H1?
Yeah. We won't give you specific specifics, but obviously, the partnership with SALIC is a major growth catalyst for Olam Agri. One source of that growth catalyst is our ability to take a higher share of the demand for the various raw materials that the Kingdom of Saudi Arabia imports. As you know, they import about 22 million tons of the various commodities that we deal in, and we hope over time to get an increasing share of the demand. That is one. Second, the Kingdom of Saudi Arabia is very keen as part of its food security agenda and mandate, to grow the agri ecosystem in the kingdom. For example, they want to increase the fish production from the current level of 150,000 tons per annum to 500,000 tons per annum....
They will need to set up more feed manufacturing facilities, fish feed manufacturing facilities. We have a very successful fish feed business. That is another example of how we can partner with SALIC to develop the agri-food and agri-business ecosystem within the Kingdom of Saudi Arabia and the broader Gulf Cooperation Council region. The consolidation of the industry in terms of what has happened with the Bunge acquisition of Glencore Viterra, also is bringing both SALIC and us closer in terms of how we can respond to that, and what are the opportunities that we can capitalize on as a result of this.
The mandate that SALIC has to secure food security for the Kingdom, plus the Gulf Cooperation Council region, and the deep financial resources that they have, combined with the Olam Agri's operational expertise, and our configuration of assets, will allow us to think more broadly and more ambitiously about how we can take full advantage of this partnership. I can't be specific this year, what we will do, next quarter, what we will do, but the reason that we invited SALIC to become a 35.4% shareholder in Olam Agri, is we see huge synergies and growth catalysts that this partnership will offer us.
Yes, Andy?
Hello. Hi, it's Andy from DBS. Just one question. Sunny, you earlier mentioned that weather is one of the key factor, right? With El Niño, you know, now at over 90% and lasting through-- likely through, winter, what do you see? Or rather, are there any, any, bene- potential benefits or risks that we should be aware of...
Yeah.
that you can capitalize on? Also, are there any key lessons that we actually can take away from the last cycle, maybe in 2015, 2016 cycle or earlier than that?
Yeah.
Yeah, maybe you can have to comment on that. Something that we can, you know, watch out for or look to benefit from.
I think, you will recall that we had told you when we had presented the Olam Agri business, that one of the rules of engagement for us in Olam Agri is that we have to be physically present in at least 90% of the producing regions for the various agri commodities that we deal in. Whether it is soybean or whether it's wheat, or whether it's corn, or whether it's barley or rice, or cotton, or wood, or rubber, the rule is that we have to be in at least 90% of the growing regions. The reason why we want to be there is, unless you are there and you have boots on the ground in these locations, then in a time of short supply because of weather or weather-related impacts, you can potentially assure reliability of supply.
You're embedded in those countries, you're in all the growing regions, you have the reach and the penetration in these growing regions to be able to provide that supply. Secondly, because you're present there, you can anticipate these changes a little bit more in advance. What is happening as a result of the weather in terms of the size of the crop, the timing of the crop, and the arrival of the crop, and the quality of the crop, which all gives you an advantage to build that supply chain resilience that you need under these conditions. I think that rule of engagement has stood us in good stead, and we will continue with that strategy. The impact on fundamental reduction in supply and crop because of weather-related phenomenon, will affect everybody in the industry.
Typically, when supply is lower than demand, you will see potentially enhanced margins, because then the security of supply becomes the key factor. If you can out-originate or if you can really out-origin, and you have real deep capabilities in the producing countries, then you have an advantage, and that is our strategy.
Okay, let me add that. Can you hear me?
No, it's not working.
That compared to, let's say, a few months ago, we don't expect as severe El Niño, and so that's one, one aspect that we need to keep in mind. For most of our crops, we have a good idea based on history that you're referring to, on which crops and which countries will have a greater impact. There is a heightened sense of capacity to be ahead of the curve, because we can't change the weather pattern, but we can be ahead of the curve or at least as good as anybody else.
The corn crop and the soybean crop, et cetera, in the U.S. is already almost made. There's only two weeks of weather uncertainty left before the corn crop is made and finished, and before the soybean crop is made and finished in the U.S., for example. The window of uncertainty about weather is reducing now, as the crops are getting fully made now. In June and July, it was very uncertain. In the middle of August, it is now less uncertain.
... We have reached the end of the questions on the webcast. Is there are no questions from the floor? Yes, the lady in green, can you pass her the mic, please?
One more question on the IPO. Has SALIC indicated to you of anything about valuation, you know, in terms of, like, they won't do the IPO if they don't get this kind of valuation? Have they indicated anything like that, or is there gonna be, like, a primary and a secondary component in the IPO? Can anything be given to us?
I think all our major shareholders will have a point of view of what is our fair value at which they would support an IPO. Obviously, we had to get a shareholders' approval before we can do an IPO. SALIC is an important shareholder. They will have a say, an important say, on the price at which they will allow us to list. It's not just SALIC, we've got many shareholders. We've got Temasek, we've got Mitsubishi, we've got Orbis, we've got tens of thousands of shareholders. They will all vote in the shareholder meeting, the EGM that will be conducted for this purpose to support an IPO. I think they all will have a view, and we have to... In order to deliver a successful IPO, we should meet those realistic expectations.
Of course, we can all ask for the moon in terms of valuation, but if that is not the market and that is not what your value is, then obviously that is unrealistic. Excuse us. Oh, you asked for a primary, secondary?
Mm-hmm.
What we had announced was $650 million primary and $350 million secondary, plus a greenshoe option.
Sorry, I just want to talk a little bit about the El Niño. I think, I guess, where we are at, most of us are thinking of El Niño as just hot weather and lowering crop yields. I think my understanding over time has been that it could likely lead to bumper crops in other parts of the area as well.
Mm-hmm.
I guess in terms of the exposure across different commodities that you guys are in-
Yeah.
How should we view El Niño?
Yeah. Firstly, there is no link between current, rising global temperatures or the hot weather that we are seeing across the world and El Niño, because El Niño is not fully set in as yet. The current increase in global temperatures is a function of climate change and the impacts of climate change. El Niño will worsen this, because El Niño is a temperature-enhancing weather phenomenon that has not happened as yet. You're right in your second part of your conclusion that El Niño will not have a uniform impact on crop, or yield reduction across crops across regions. There'll be some regions in the world where there'll be positive for crop production and yields, and there'll be other parts of the world where it'll be negative.
Overall, the modeling on the impact of climate change and El Niño on crop production is negative. It'll also depend on which crops. For soybean and corn and rice, these will all be different impacts depending on where they're grown, in fact, which latitude they are grown. It is not that you can have a straight line interpretation, but if you want to simplify all this, climate change is going to be negative for crop production overall.
If there are no other questions, I would like to bring the session to a close. Before I do that, if I can ask the speakers if they have anything to add to their answers earlier?
I'm just surprised and grateful. This was a six to seven meeting. It is now 7:24. Your appetite to sit on a Friday evening and listen to us and ask us questions, we are very grateful for your commitment and the investment of time. Thank you.
Thank you.
Thank you.
Thank you.