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IOI CORPORATION BERHAD CGS-CIMB 14th Annual Malaysia Virtual Corporate Day 5-7 January 2022
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IOI CORPORATION BERHAD

Feb 23, 2023

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Page 1: IOI CORPORATION BERHAD

IOI CORPORATION BERHAD

CGS-CIMB 14th Annual Malaysia Virtual

Corporate Day

5-7 January 2022

Page 2: IOI CORPORATION BERHAD

ConclusionGroup Overview

2

Awards and Achievements

Why Invest in IOI?

Business Segments : Plantation & Resource Based Manufacturing

Group Financial Snapshot

Introduction to IOI1

2

4

6

7

ESG at IOI3

IOI Five-Year Plan (2020-2024)

5

Page 3: IOI CORPORATION BERHAD

Conclusion1. Introduction to IOI

3

Founded in 1969

Global presence in 8 countries across

4 continents

A leading global integrated & sustainable

palm oil group with upstream

and downstream operations

2nd Most Valuable Plantation

Company on Bursa Malaysia with

market capitalisation of US$5.65bn as

of 30 September 2021

25,000 employees

Page 4: IOI CORPORATION BERHAD

ConclusionVision, Mission & Core Values

4

Committed to sustainable agriculture and innovative products.

Our Mission is to achieve responsible and sustainable

commercial success by addressing the interests of all our

stakeholders, caring for the community and the

environment, and adopting best practices to be globally

competitive.

Our Vision is to be a leading and sustainable Malaysian

business corporation with global presence.

VISION MISSION

Page 5: IOI CORPORATION BERHAD

ConclusionIntegrated Value Chain

5

▪ Fully integrated business model with upstream and downstream operations to mitigate the impact of

commodity price fluctuations.

▪ The downstream business creates a natural hedge against palm oil volatility due to negative correlation of its

earnings with palm oil prices.

Plantation Resource-based manufacturing

Input:

▪ Land

▪ Production

resources

▪ Agriculture

equipment

▪ Workers

Breeding:

▪ Plant breeding

▪ Tissue culture

▪ Seed production

▪ Nursery

Plantation

Palm Wood

(Future

development)

Solar &

Cogeneration

Plant

Oleochemical

Other Oils

Specialty Oils &

Fats(1)

Other Oils

MillsRefinery & Kernel

CrushingSeedlings

Workers’ Housing

& FacilitiesBiomass & Biogas Cogeneration Plant

Public Power Grid

(Future Opportunity)

Fractions Infant Nutrition

Food

Ingredients

Non-Food

Applications

Soap Noodles &

Esters

Fatty Acids &

Glycerine

Specialty

Chemicals

Power

Palm fibres,

POME

Methane

capturePower Power

Power

FFB

CPO,

PK

Trunks

Palm oil,

PKO

EFB,

Fronds,

Trunks

Biomass recycled

Power

Inputs Business activities

Outputs Circular economy

Legends

Note: EFB – Empty Fruit Bunches; FFB – Fresh Fruit Bunches; CPO – Crude Palm Oil; PK – Palm Kernel; PKO – Palm Kernel Oil; POME – Palm Oil Mill Effluent

(1) 30% owned associate company, Bunge Loders Croklaan.

Page 6: IOI CORPORATION BERHAD

Global Presence

6

Global presence in 8 countries across 4 continents with sales diversified to more than 80 countries

Asia, 82.2%

Africa, 3.0%

Europe, 10.9%

North America, 2.6%

South America, 0.9%

Rest of World, 0.4%

Oleochemical - Exports by regions

Commodity(1) - Exports by regions

Asia, 40.2%

Africa, 4.6%

Europe, 42.4%

North America, 12.6%Rest of World, 0.2%

Resource-based manufacturing Sales / procurement / regional officePlantation & mill

Note:

(1) Excludes sales of palm kernel expellers.

Page 7: IOI CORPORATION BERHAD

64%

36%

63%

35%

2%

47%53%

7

Group Financial Snapshot

Source: Company annual report.

Note: FFB: Fresh fruit bunches. MT: tonnes. Ha: hectares.

(1) Net profit after tax including profit attributable to both owners of parents and non-controlling interests.

(2) Based on segment results as disclosed in segmental information note in audited financial statements.

Key financials and operational statistics (financial year ending 30 June)

(RM million) 2019 2020 2021

Revenue 7,386 7,802 11,252

EBIT 1,077 1,138 1,741

Net profit(1) 618 602 1,416

Plantation: FFB production (‘000 MT) 3,399 3,097 2,918

Plantation: Total oil palm area (‘000 Ha) 176 177 177

Oleochemical: Sales volume (‘000 MT) 714 670 648

Refinery: Sales volume (‘000 MT) 1,917 1,974 2,217

Segment result (2)

FY2019 FY2020 FY2021

Plantation Resource-based manufacturing Others

2. Group Financial Snapshot

Page 8: IOI CORPORATION BERHAD

8

Group Financial Snapshot3. ESG at IOI

IOI is fully committed to sustainable palm oil

Environment Social Governance

✓No Deforestation, No New

Planting on Peat, No Social

Exploitation (“NDPE”) since

2016;

✓Progressively reducing Greenhouse

Gas (“GHG”) emissions (2025

Target : To reduce GHG emissions

by 41% from 2015 levels);

✓Protection of High Conservation

Value (“HCV”) and High Carbon

Stock (“HCS”) areas.

✓Eliminate all forms of illegal,

forced labour or child labour in

our operations or supply chains;

✓Responsible recruitment practices

including “No Recruitment Fee”

policy;

✓Occupational safety & health;

✓Employees’ well-being;

✓Empowerment & inclusion;

✓Community engagement.

✓Robust sustainability governance

structure;

✓Integrity in corporate reporting;

✓Zero-tolerance to bribery and

corruption;

✓Transparent grievance resolution

and communication;

✓Sustainable certifications (RSPO,

MSPO, ISCC and ISPO);

✓Founding member of RSPO.

Page 9: IOI CORPORATION BERHAD

9

Group Financial Snapshot3. ESG at IOI (cont’d)

• Constituent of the FTSE4Good Index

• Awarded the most improved company in Water Security by CDP

• Ranked 17 out of 100 assessed palm oil producers, processors and traders for

Sustainability Policy Transparency Toolkit (SPOTT) by the Zoological Society of

London (2021)

• Leader category in protection of children’s rights with the score of 8.1 by Global

Child Forum Southeast Asia Benchmark(2020)

• Achieved silver rating within 90th percentile by Ecovadis (IOI Oleochemical)

Acknowledgements for our sustainability work

ESG ratings

ESG Score : 25.5 medium risk

(0 to 100)(2)ESG Rating : BBB

(AAA to CCC)

(1) Higher percentile represents higher ESG score

(2) Lower score represents lower ESG risk

ESG Ranking : 71st percentile

(0 to 100)(1)

Page 10: IOI CORPORATION BERHAD

Plantation 4.1 Plantation

10

Key information Key Competitive Strengths

Total planted area(1)

178,105 HaTotal FFB production

2.9m MT

Operating Units

96 estates & 15

mills (Malaysia & Indonesia)

R&D Capabilities

4 R&D centers &

1 Bio-Tech center

(1) Excludes those owned by associate companies

(2) Excluding Serawak concessions, which are 2% of total group planted area

• Strong agronomy capabilities & estate

management practices.

• IOI Palm Biotech is a leading tissue culture

facility producing high-yielding planting material.

• 100% of Malaysian plantations(2) are both RSPO

and MSPO certified.

Holds 32% interest in an associate company, Bumitama Agri Ltd, which has a planted nucleus area of 133,000

ha as at 30 June 2021 (effective interest is approx. 43,000 ha).

Page 11: IOI CORPORATION BERHAD

Plantation

LOCATION OF PLANTATION OPERATIONS

11

Plantation

Sabah

Sarawak

Kalimantan, Indonesia

(21,134 Ha)

East Malaysia

(112,824 Ha)

Pahang

Selangor

Penang

JohorKLIA

IOI HQ

Peninsular Malaysia

(42,968 Ha)

Main port

Main airport

Palm oil mill

Plantation

East coast expressway

North-South expressway

Page 12: IOI CORPORATION BERHAD

12

Plantation – Oil Palm Age Profile

Weighted

average

planting age:

13.5 years

23.0

21.220.8

21.421.8

21.4

2019 2020 2021

FFB Yield per mature ha OER (%)

FFB yields and Oil Extraction Rates (OER)

Page 13: IOI CORPORATION BERHAD

13

Plantation – Replanting

9,172

10,000

7,100

2019 2020 2021

Accelerated replanting hectarage over the last 3 years

(Average per year is c.8,800 ha or c.5.6% of total Malaysian planted area)

• Utilise elite clonal palms in 50% of our replanting materials

• Replanting is key to our future source of growth

Page 14: IOI CORPORATION BERHAD

Plantation Plantation

14

Progress and highlights

• Completed new planting of about 400 ha of oil palm on last concession area in Kalimantan, Indonesia

during FY2021 while the balance of approximately 500 hectares area will be fully planted by end of 2022.

• Implemented mechanisation of FFB Main Line Evacuation to 40% of total estates areas in Malaysia

and Indonesia as at end of FY2021, and expected 100% completion by year 2023.

• Implemented e-wallet payment system to 50% of plantation operating units to automate and simplify

workers’ payroll system as at end of FY2021.

• Full implementation of SAP ERP system and mobile crop monitoring system in all Malaysian

plantations.

Page 15: IOI CORPORATION BERHAD

Plantation4.2 Resource-Based Manufacturing

15

Key information Key Competitive Strengths

• Largest fatty acids producer in Malaysia

• Pioneer and first in the industry to manufacture

palm based oleochemical products.

• Established global partnerships with food,

pharmaceutical and cosmetic MNCs with export

to over 80 countries worldwide.

Oleochemical capacity

780k MT/yearRefining capacity

1.8m MT/year

6 Manufacturing facilities (in Malaysia and Germany)

Specialty oils and fats

capacity

1.1m MT/year

6 Manufacturing facilities (in Malaysia, Netherlands, USA, Canada,

Ghana and China.)

• The resource-based manufacturing business, comprising of refining, oleochemical and specialty oils and fats sub-segments.

• Presence in specialty oils and fats sub-segment is represented by Bunge Loders Croklaan, a 30%-owned associate company.

IOI Oleo GmbH, Germany

Page 16: IOI CORPORATION BERHAD

Resource Based Manufacturing

16

Resource Based Manufacturing

Oleochemical applications

Cosmetics

& Toiletries

Plastic &

additives

Soap &

Detergents

Rubber

& TiresLubricants

& GreasesPharmaceuticals Paint & Ink

Specialty oils & fats applications

CulinaryBakerySpreads Animal NutritionConfectionary FryingInfant nutrition

Page 17: IOI CORPORATION BERHAD

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

FYE 2019 FYE 2020 FYE 2021

714,131 669,854 648,130

1,917,195

1,973,7922,217,093

Sales Volume in MT

Oleochemical Refinery

Resource Based Manufacturing

Key Operational Highlights

Resource Based Manufacturing

17

Resource Based Manufacturing

MT

Export by Region

0

20

40

60

80

100

FYE 2019 FYE 2020 FYE 2021

82 77 76

6569

63

Manufacturing Performance - Plant Utilisation (%)

Oleochemical Refining

Asia, 82.2%

Africa, 3.0%

Europe, 10.9%

North America, 2.6%

South America, 0.9%

Rest of the World, 0.4%

Oleochemical

Asia, 40.2%

Africa, 4.6%

Europe, 42.4%

North America, 12.6%

Rest of the World, 0.2%

Refinery

Page 18: IOI CORPORATION BERHAD

• Bunge Loders Croklaan’s launched a premium lipid ingredient

for infant milk formula that mimics the fat composition of

mother’s milk.

• Increased sales of low 3-MCPD and high-end MCT (“medium

chain triglycerides”) use in nutritional and healthcare products.

• New 110,000 MT/year capacity oleochemical plant in Prai,

Penang is slated to complete by Q2 2022.

• New soap noodle plant in Pasir Gudang, Johor to be

completed by Q2 2022.

• Owner of 19 patents for pharmaceutical applications via

IOI Oleo GmbH, Germany.

• Production sites in Witten and Wittenberge completely

switched to 100% green electricity.

• CPO is 100% traceable to mill and 83% to plantation.

• PKO is 100% traceable to mill and 69% to plantation.

Resource Based Manufacturing

Progress and highlights

Resource Based Manufacturing

18

Resource Based Manufacturing

Refinery

Specialty oils &

fats (associate)

Oleochemical

Page 19: IOI CORPORATION BERHAD

5. Why invest in IOI

19

LEADING INTEGRATED PALM OIL GROUP WITH GLOBAL PRESENCE

EFFICIENT PALM OIL PRODUCER

WELL-ESTABLISHED AND INNOVATIVE OLEOCHEMICAL SEGMENT

RESPONSIBLE AND SUSTAINABLE PRACTICES

GOOD DIVIDEND TRACK RECORD

• A fully integrated business model with upstream and downstream operations to mitigate impact of commodity

price fluctuations

• Global presence in 8 countries across 4 continents

• Sales are diversified to more than 80 countries to mitigate our exposure to localised risks in any particular market

• Proven track record as one of the most efficient major palm oil producers

• IOI Palm Biotech is a leading tissue culture facility producing superior high-yielding oil palm clonal planting

materials

• Earliest and largest fatty acids producer in Malaysia

• Owner of 19 patents for pharmaceutical applications via IOI Oleo GmbH, Germany

• CARE Studio in Germany developed 40 formulations for personal care and cosmetic applications

• 100% of Malaysian plantations are RSPO & MSPO certified

• A member of the FTSE4Good Malaysia Index, 71st percentile in the assessment for Dow Jones Sustainability

Index (“DJSI”) and 90th percentile on the EcoVadis Rating

• Committed to the No Deforestation, No Peat and No Exploitation (“NDPE”) policy since 2016 and a

member of High Carbon Stock Approach (“HCSA”) Group

• Policy of declaring at least 50% of normalised profit after tax and minority interest (“PATAMI”) as dividend

Page 20: IOI CORPORATION BERHAD

20

Increase

yield

▪ Target: Increase plantation oil yields by 15% by 2024

▪ Utilise elite clonal palms in 50% of our replanting materials

▪ Ensure proper fertiliser application to increase target yields

Optimize

workforce

▪ Target: Reduce workforce by more than 25% by 2024 and

increase plantation worker productivity by 3% every year

▪ Implemented Mechanised FFB Main Line Evacuation System in

40% of estates.

▪ Implemented SAP ERP and mobile crop monitoring in Malaysian

plantations

▪ Employing mechanical fertiliser spreaders and chemical sprayers

with GPS

Diversify

crops

▪ Target: Diversify planting of crops away from full reliance

on oil palm

▪ Plant 5,000 hectares of coconut, 300 hectares of kenaf and 200

hectares of durian equivalent to 4% of our Malaysian plantations

▪ Plant three types of fast growing and high value fruit crops as

intercrop with coconut and oil palm.

IOI five-year plan (2020-2024)

1

2

3

6. IOI Five-Year Plan (2020-2024)

• Progress from a cost competitive palm oil producer to a high value-added diversified palm-based products producer, to increase resilience and competitiveness for the future

Page 21: IOI CORPORATION BERHAD

21

• Progress from a cost competitive palm oil producer to a high value-added diversified palm-based products producer, to increase resilience and competitiveness for the future (cont’d)

Increase the

non-CPO

segment

▪ Target: Convert oil palm by-products and processing

waste into value-added products at a competitive cost (circular economy)

▪ Build IOI Palm Wood factory and commence high performance palm wood boards and panels production in Q4

2022.

▪ Installed methane gas capture facilities in 12 mills, out of

which 9 produce power in addition to biogas for steam boiler.

▪ Explore other new conversion technologies for our bio-mass.

Grow the

oleo-

chemical

segment

▪ Target: Increase oleochemical segment’s sales volume

by 15% and profitability by 25%;

▪ Constructing new 110,000 MT/year capacity oleochemical

plant in Prai, Penang which is slated to complete by the second quarter of 2022.

▪ Constructing a new soap noodle plant in Pasir Gudang, Johor.

▪ A new pilot plant for pharmaceutical excipients and active

ingredients has commenced operations in Germany.

IOI five-year plan (2020-2024)

4

5

6. IOI Five-Year Plan (2020-2024)

Page 22: IOI CORPORATION BERHAD

Sustainability

22

7. Awards and Achievement

Page 23: IOI CORPORATION BERHAD

Thank You

23