Tate & Lyle Plc · LSE:TATE
Tate & Lyle — Investor Day (September 2018)
105 slides from Tate & Lyle's investor day presentation, Sep 12, 2018
Slide 1: Capital Markets Day
CAPITAL MARKETS DAY 12 September 2018
Slide 2: Cautionary Statement
Cautionary Statement This presentation for the Capital Markets event on 12 and 13 September 2018 has been prepared solely to provide information to assess the Group’s strategy and should not be relied upon for any other purpose. It contains certain forward-looking statements with respect to the fina
Slide 3: Overview
OVERVIEW Nick Hampton, Chief Executive Copyright © Tate & Lyle PLC 2018 3
Slide 4: Sharpen Accelerate Simplify
SHARPEN ACCELERATE SIMPLIFY 4
Slide 5: Today
Today… 8.00 am 11.30 am Overview Delivering Customer Solutions Nick Hampton Interactive sessions (x2) Chief Executive Lunch inspired by Tate & Lyle solutions Sharpening Customer Focus Interactive sessions (x2) Jim Stutelberg President, Primary Products 3.00 pm Driving Productivity and Financials Joa
Slide 6: Long-term evolution of Tate & Lyle
Long-term evolution of Tate & Lyle Sugar Commodity Adding SOLUTIONS Refining Processing Value PROVIDER 1859 2018 1921 1988 2010 2015 Tate and Lyle Acquisition of US corn Sold EU sugar Re-aligned European businesses merge wet milling business refining business Eaststarch business 6
Slide 7: Significant transformation over last three years
Significant transformation over last three years Reset Business Strategy Execution 2015 − 2017 2018 onwards • Three key priorities − Sharpen customer focus Portfolio Strategy − Accelerate portfolio development − Simplify and drive productivity Operating • Purpose-driven organisation Organisation cap
Slide 8: Strong performance delivered over last three years
Strong performance delivered over last three years Adjusted profit before tax1,3 Adjusted earnings per share1,2,3 Adjusted free cash flow1,3 25% 21% 92% CAGR CAGR CAGR £301m £271m 50.1p £196m 47.1p £174m £193m 34.5p £53m FY16 FY17 FY18 FY16 FY17 FY18 FY16 FY17 FY18 1 Adjusted results and a number of
Slide 9: Today - An integrated business
Today − An integrated business Two important divisions Managed together to Food & Beverage Primary optimise overall return Growth Cash Solutions Products • Shared assets Innovation Global Operations Support Functions • Common customers 9
Slide 10: Strong value propositions
Strong value propositions FOOD & BEVERAGE SOLUTIONS PRIMARY PRODUCTS Value proposition Value proposition Shared assets • Growing, global market • Stable North American market • Provide solutions: − Lower sugar, calories and fat • Strong positions: − Add fibre − Sweeteners − Clean label − Industrial
Slide 11: Well-balanced business
Well-balanced business Investment case Primary Food & Beverage Sucralose Products Solutions Manage for stable earnings; Growth driver; Manage for cash; cash generation top and bottom line growth high return on assets EARNINGS PER SHARE1 – Accelerate growth ORGANIC RETURN ON CAPITAL EMPLOYED2 – Impro
Slide 12: Three Clear Priorities
Three Clear Priorities SHARPEN ACCELERATE SIMPLIFY 12
Slide 13: Driving business performance
Driving business performance SHARPEN ACCELERATE SIMPLIFY • Product to Category • New Product commercialisation • Simplify organisation • Global to ‘Glocal’ • Partnerships and Open Innovation • Integrated productivity agenda • Integrated commercial organisation • More active focus on acquisitions Pur
Slide 14: Purpose-driven organisation
Purpose-driven organisation Our solutions Improving lives for generations improve the texture and functionality of food and drink worldwide Sucralose has taken Positive >85 trillion calories Grow business +impact on society out of diets globally in last 26 years Delivering nutrition and taste to pro
Slide 15: New, diverse leadership team
New, diverse leadership team Nick Hampton Imran Nawaz Joan Braca Jim Stutelberg Melissa Law Chief Executive Chief Financial Officer President, President, President, Food & Beverage Solutions Primary Products Global Operations Andrew Taylor Laura Hagan1 Rowan Adams Lindsay Beardsell2 President, Innov
Slide 16: Refreshed talent profile over last 2 years
Refreshed talent profile over last 2 years 1 level below Category/ Emerging Executive Customer Markets Committee 46% 50% 13% New Of hires from Increase2 in to role1 Food & Beverage employees as sector business grows 1 Includes internal promotions and new hires 2 Includes Latin America, Asia Pacific
Slide 17: Building dynamic culture
Building dynamic culture Behaviours PARTNERSHIP AGILITY EXECUTION Values SAFETY, INTEGRITY, RESPECT 17
Slide 18: Summary
Summary • Integrated business managed to optimise overall return SHARPEN • Two important divisions with strong value propositions • Three programmes underway to realise growth potential • New leadership team, capabilities and culture ACCELERATE • As programmes gather momentum, we expect − Growth in
Slide 19: Primary Products
PRIMARY PRODUCTS Jim Stutelberg, President Copyright © Tate & Lyle PLC 2018 19
Slide 20: Agenda
Agenda Business Priorities 20
Slide 21: Primary Products
Primary Products • Focused predominantly on North America PRIORITY • Serves large, relatively stable markets with high barriers to entry • Strong market positions underpinned by long-standing customer relationships Steady earnings and • Cost competitive asset base cash generation • Strong business w
Slide 22: Significant reshaping over the last six years
Significant reshaping over the last six years Portfolio reshaped to focus Operating model refined predominantly on North America to deliver steady earnings Sharpen Sale of corn wet Product line customer Exited Citric Acid joint focus venture in Colombia mill in Morocco focus 2012 2015 2016 2017 2018
Slide 23: Delivered strong earnings growth
Delivered strong earnings growth Primary Products Performance drivers Total operating profit1 • Good industry dynamics £166m 26% − US corn wet milling CAGR3 industry well-balanced £129m − Lower US corn and input prices £84m £83m 134 − Favourable commodities market 121 63 93 • Actions to drive perfor
Slide 24: Primary Products
Primary Products Industrial Joint Sweeteners Acidulants Commodities starches ventures HFCS 55 EthylexTM Citric Acid Corn Gluten Feed DuPont Tate & HFCS 42 Pearl Starch Malic Acid Corn Gluten Meal Lyle Bio-Products Corn Syrup Cationics Fumaric Acid Corn Oil Almex Dextrose Dextrins Ethanol 24
Slide 25: Primary Products sales
Primary Products Sales Year ended 31 March 2018 Total £1.7bn Geographic mix Industrial Starches 93% 14% 8% Acidulants Sweeteners 49% 29% Commodities 7% North Rest America of the World Note: Excluding joint ventures 25
Slide 26: Sweetener market remains stable
Sweetener market remains stable Sweetener growth/decline Market Dynamics US corn wet milling industry (2014-17) • Supply/demand environment Growth Flat Decline remains balanced • Decline in US demand for HFCS offset by exports to Corn Syrup HFCS 55 (US) Mexico and demand for HFCS exports HFCS 42 (US
Slide 27: Industrial starch market remains stable
Industrial starch market remains stable Industrial starch growth/decline Market Dynamics US corn wet milling industry (2014-17) • In North America, c.80% Growth Flat Decline of industrial starch used in paper industry • Growth in packaging driven Packaging Newsprint by home delivery from Paper and w
Slide 28: Key Priorities
Key Priorities 1. Product line focus SHARPEN 2. Portfolio management ACCELERATE 3. Sharpen customer focus SIMPLIFY 4. Build organisation and culture 28
Slide 29: Product Line Focus
Product Line Focus Through new operating model Product Lines Sweeteners Industrial starches Acidulants Co-Products Drive Portfolio Market analysis Management Product line strategy and execution Pricing strategy and execution Sharpen Mix management Customer Focus Capital planning Focus on market and
Slide 30: Portfolio Management
Portfolio Management Maximise margins through mix, efficiency and grind diversification Customer, product and category mix Growth1 in volume and unit margin Years ended 31 March • Optimise customer and product mix +22% • Margin expansion opportunities Operational efficiency • Capital investment to d
Slide 31: Portfolio Management: Industrial Starch Customer
Portfolio Management Example: Industrial Starch Customer Delivering margin trade-ups through superior service • Deep customer partnerships • Solving customer problems • Providing on site service Unique mobile equipment • Utilising technical resources 31
Slide 32: Portfolio Management: Sweetener Customers
Portfolio Management Example: Sweetener Customers Approach • Target margin trade-up opportunities • Target new and growing end-markets • Grow volume share Outcome • Margin expansion • Moving mix from declining to growing markets • Supports steady earnings 32
Slide 33: Grind diversification (Bio-PDO)
Portfolio Management Grind diversification (Bio-PDOTM) Overview • Joint venture formed in 2004 Sales1 Profit before tax1 • Uses plant-based feedstock (corn) instead of petroleum- US$129m US$25m based feedstocks to produce 1,3-propanediol (PDO) • Broad range of applications Volume Capacity expansion
Slide 34: Grind diversification: DuPont Tate & Lyle BioProducts
Portfolio Management Grind diversification DuPont Tate & Lyle BioProducts volume growth FY15-181 Personal Care Tate & Lyle DuPont Monomer 35% Tate & Lyle BioProducts Loudon, Tennessee Loudon, Tennessee2) DPTL Apparel Loudon Dextrose Monomer Polymer 10% Carpet/Flooring 1 Years ended 31 March; Compoun
Slide 35: Organisation and Culture
Organisation and Culture LEADERSHIP • Strengthened leadership team − Good balance of sector and industry experience with 150+ years food industry experience in team • Refreshed division’s overall talent profile − 25% of employees new to company in last 3 years CAPABILITIES • Enhanced management and
Slide 36: Primary Products Summary
Primary Products Summary Strong business Managed for steady earnings • Focused predominantly on North America • Product line focus • Serves large, relatively stable markets • Portfolio management with high barriers to entry − Customer, product and category mix − Operational efficiency • Strong marke
Slide 37: 10 Minute Break
10 MINUTE BREAK TATE LYLE | <7
Slide 38: Food & Beverage Solutions
FOOD & BEVERAGE SOLUTIONS Joan Braca, President Copyright © Tate & Lyle PLC 2018 38
Slide 39: Agenda
Agenda Business Priorities 39
Slide 40: Food & Beverage Solutions
Food & Beverage Solutions Well-placed to address global consumer trends FOCUS • Sugar and calorie reduction, fibre enrichment and clean label Operates in large, growing global ingredients market • Combines ingredient and category expertise to tailor solutions for customers • Serves global, regional
Slide 41: Focus globally is on three categories
Focus globally is on three categories Sales by Category Market Opportunity 31 March 2018 ~75% of sales in global focus categories Addressable Category Growth1 ingredient market1 Other regional Beverages ~US$15bn 5%2 category Beverage priorities Dairy ~US$5bn 5% Soups, Dairy sauces and dressings Soup
Slide 42: Major global trends are impacting the food industry
Major global trends are impacting the food industry 70 million children 110 million diabetics Global population projected to be overweight in China, estimated to increase expected to grow or obese globally by 20251 to 154 million by 20402 by a third by 20503 1 World Health Organisation 2 Internation
Slide 43: Trends driving consumer, customer and government actions
These trends are driving consumer, customer and government actions Trends Actions Obesity and Diabetes Reduce sugars by 81%1 at least 5% over taste primary four years to 2020 driver of Sugar Taxes purchase Population Growth Reduce calories 84%2 looking to limit by 20% by 2025 sugar in their Regulato
Slide 44: Sugar replacement is a key market opportunity globally
Sugar replacement is a key market opportunity globally Sugar has ~80% share of Sugar replacement global sweetener market1 opportunity2 By size By value Non-sugar 20% ~4m Tonnes ~US$2.5bn of sugar Sugar 80% 1 Euromonitor; International Sugar Organisation 2 Euromonitor, BCG analysis 2016 (estimated va
Slide 45: Yellow Cake: 25% Sugar Reduction
Yellow Cake: 25% Sugar Reduction YELLOW CAKE PROMITOR® Soluble Corn Fibre provides bulk Ingredients % replacement Sucrose 20.69 PROMITOR® SCF 85 Soluble Corn Fibre 6.37 Cake Flour 22.99 CLARIA® Functional Water 17.13 Clean-Label Starch Shortening 12.40 contributes moistness and a tender texture Egg
Slide 46: Sweet Iced Tea: 50% Sugar Reduction
Sweet Iced Tea: 50% Sugar Reduction DOLCIA PRIMA® Allulose SWEET ICED TEA contributes a sugar-like sweetness and mouthfeel Ingredients % Unsweetened Tea Base 92.39 Sucrose 3.80 PROMITOR® Soluble Corn DOLCIA PRIMA® Allulose 2.00 Fibre provides body and PROMITOR® Soluble Corn Fibre 85A 1.80 mouthfeel
Slide 47: Portfolio well-placed to provide solutions for global trends
Our portfolio is well-placed to provide solutions for customers and consumers to meet global trends Sweeteners #1 in sweetener solutions Health & Wellness • Replaces sugars #2 in fibre enrichment solutions • Increases sweetness • Replaces sugar to reduce • Reduces calories Value calories while maint
Slide 48: Sugar replacement is a key growth opportunity
Sugar replacement is a key growth opportunity in our focus categories Growth in product launches with low/no/reduced sugar claims and a fibre ingredient1 2013−2017 (CAGR) All Food & Beverages globally Key global categories 31% 23% 23% 10% Soups, sauces Beverage Dairy and dressings 1 Mintel GNPD 48
Slide 49: Strategy delivering good financial performance and geographic mix
Strategy delivering good financial performance and geographic mix Adjusted operating profit1 Volume2 Sales2 Years ended 31 March Year ended 31 March 2018 Year ended 31 March 2018 Total +3% Total £850m 13% +7% Asia Pacific and Latin America CAGR3 +6% £192m £181m 22% £150m 49% North America 29% +1% Eu
Slide 50: Key Priorities
Key Priorities 1. Sharpen customer focus SHARPEN 2. Maintain momentum in emerging markets ACCELERATE 3. Accelerate growth in North America SIMPLIFY 4. Build organisation and culture 50
Slide 51: Sharpen Focus on Customer
Sharpen Focus on Customer One, solutions-based and category-led approach for customers To: To: From Common Approach Applied Locally Separate One business business units with integrated teams Differentiated for customers’ specific needs Commercial teams Commercial teams organised geographically organ
Slide 52: Enhancing capabilities to better serve customers
Sharpen Focus on Customer Enhancing capabilities to better serve customers Capabilities • Technical and sales excellence programmes 35% • Implemented Salesforce.com Increase in value of global customer • Live, global and local dashboards track all active projects in pipeline1 customer opportunities,
Slide 53: Maintain Momentum in Emerging Markets
Maintain Momentum in Emerging Markets Geographic expansion model Expansion model Asia Pacific and Latin America Sales1 Get Smart Understand local trends and FY16 to FY182 Mix in year ended customers (CAGR growth) 31 March 2018 Get In Get Build beachhead Ahead with existing Partner, products Innovate
Slide 54: Developing a repeatable category model
Maintain Momentum in Emerging Markets Developing a ‘repeatable category model’ Large dairy players Applied same model in China elsewhere Our approach Leading dairy • Sold existing products player in Algeria ~40% • Built customer relationship Market share in China Leading • Introduced new products so
Slide 55: Local labs serving local tastes
Maintain Momentum in Emerging Markets Local labs serving local tastes North America Chicago, Global Innovation Centre Europe, Middle East and Africa • Lübeck, Germany (hub) 18 Application and • Sycamore, Illinois • Mold, UK • Lille, France technical service • Princeton, New Jersey • Dubai, UAE centr
Slide 56: Increased regional presence allows us to accelerate innovation
Maintain Momentum in Emerging Markets Increased regional presence allows us to accelerate innovation Partnered with government and local customer to deliver sugar reduced innovation at pace Partnership, Agility, Execution 56
Slide 57: Accelerating Growth in North America
Accelerating Growth in North America Winning Winning in new Winning with Global Accounts customers/channels with Innovation 57
Slide 58: Driving growth in North America
Accelerating Growth in North America Driving growth in North America North America volume growth2 January to July 2018 Years ended 31 March 2% • Value of projects in customer pipeline1 +20% Flat H2 H1 FY18 H2 FY18 • Mix of pipeline including new products +2ppts FY17 -3% • Mix of sales into priority
Slide 59: Organisation and Culture
Organisation and Culture • Strengthened leadership team LEADERSHIP − Mix of sector and cross-industry experience − 33% women leaders (+20% from 3 years ago) − Created new commercial, customer-focused leadership roles (Commercial and New Business Development) CAPABILITIES • Programme to further stren
Slide 60: Food & Beverage Solutions Summary
Food & Beverage Solutions Summary Well-positioned business Clear priorities • Well-placed to address global consumer trends • Sharpen customer focus • Sugar reduction is key global market opportunity • Maintain momentum in emerging markets • Ingredient portfolio and technical expertise able to solve
Slide 61: Innovation and Commercial Development
INNOVATION AND COMMERCIAL DEVELOPMENT Andrew Taylor, President Copyright © Tate & Lyle PLC 2018 61
Slide 62: Agenda
Agenda ICD Overview Accelerating Portfolio Development 62
Slide 63: Innovation and Commercial Development
Innovation and Commercial Development • Critical growth enabler for Tate & Lyle and our customers • Unique strengths drive innovation − Sweetener, Texturant and Health & Wellness solutions − Expertise in sugar and calorie reduction across platforms • Strong track record of commercialising innovation
Slide 64: ICD is a key enabler of future growth
ICD is a key enabler of Tate & Lyle’s future growth ICD’s unique structure enables rapid commercialisation of new ingredients and solutions Platform Research & Nutrition Science Open Strategy Development and Regulatory Innovation Partner with Rapid commercialisation Globally leading customers with F
Slide 65: Significant progress strengthening innovation model
Significant progress strengthening innovation model in last 12 months From To Impact Portfolio built around small Portfolio more balanced number of higher risk across size and ‘time to impact’ • Number of new product sales ‘breakthrough’ projects leads increased by >5x Increasing resources on Extern
Slide 66: Three core innovation platforms
Three core innovation platforms Sweeteners Texturants Health & Wellness • World-class sweetener • Expertise in high growth • Proprietary fibre manufacturing Key solutions expertise clean label starches process with high flexibility capabilities • Leading portfolio of • Proprietary starch ingredient
Slide 67: Advantaged at intersection of three platforms
Advantaged at intersection of three platforms Sweeteners Health & Wellness • Replaces sugars • Increases sweetness • Replaces sugar to reduce Value calories while maintaining • Reduces calories taste and enjoyment • Influences product body and mouthfeel • Adds nutrition through fibre enrichment Tast
Slide 68: Customers value our ingredients and expertise
Customers value our ingredients and expertise at this intersection Nutrition Dairy • Opportunity: help mid-sized • Opportunity: growth of almond customer expand its presence in milk as consumers embrace high growth nutrition bar market plant proteins • Challenge: develop low sugar • Challenge: meet
Slide 69: Strong trajectory of innovation performance
Strong trajectory of innovation performance New Product Sales Sales US$m 18 121 105 Sweeteners 38% 86 CAGR 69 Health & Wellness 48 37 18 Texturants FY12 FY13 FY14 FY15 FY16 FY17 FY18 ‘New Products’ are products launched within the last 7 years FY represents years ended 31 March 69
Slide 70: Priorities to accelerate portfolio development
Priorities to accelerate portfolio development SHARPEN • Drive joint development agenda with key customers • Expand project portfolio with better short- and long-term balance ACCELERATE • Actively pull forward and increase resources on projects that best fit trends • Drive externally-sourced innovat
Slide 71: Sharpening Customer Focus
Sharpening Customer Focus Example: Driving joint development agendas with key customers From To Solutions Product ‘pushes’ developed jointly based on with customers new ingredient to address key technology challenges In last >20 >100 >40% R&D ‘Top-to-Top’ customer visits of projects jointly 12 month
Slide 72: Improving size and quality of pipeline
Accelerating Portfolio Development Example: Improving size and quality of pipeline Projects +40%1 • Reinvigorated project portfolio in last 12 months − 40% increase in number of projects − 25% increase in potential sales value Value +25%1 • Better portfolio balance with greater focus on Breakthrough
Slide 73: Expanding texturant portfolio
Accelerating Portfolio Development Example: Expanding texturant portfolio to win in higher growth markets Texturant products New Texturant launched1 areas entered 23 Clean label Non-GMO • Process stability • Comprehensive range of texture profiles 16 • Shelf quality • Non-GMO Project • Unmatched tas
Slide 74: TASTEVA M
Accelerating projects that best fit higher growth customer needs Example: TASTEVA® M Consumers: Prefer natural sweeteners but perceive bitter aftertaste typically associated with stevia CHALLENGE Customers: Want better tasting stevia solutions to enable high levels of sugar replacement at a viable c
Slide 75: Building a leading stevia portfolio
Driving partnerships to accelerate growth Example: Building a leading stevia portfolio Leading stevia portfolio Vertically Leaf-based integrated price competitive leading stevia Reb M for highest expertise from levels of sugar seed to leaf replacement extract 75
Slide 76: Increased focus on Open Innovation
Accelerating Portfolio Development Example: Increased focus on Open Innovation Incubator Partnerships Research Partnerships • Expanding external research network • Building partnerships with leading institutions in US, Europe and Asia • New partnership with leader in food space • >30 new relationshi
Slide 77: Build Organisation and Culture
Build Organisation and Culture • Strengthened capabilities LEADERSHIP − Expanded R&D team by >20% in past 12 months • Deepened focus on core scientific capabilities − Scientists with bio-chemistry expertise >25% of team − Scientists with formulation science expertise >20% of team CAPABILITIES • Exte
Slide 78: Innovation and Commercial Development Summary
Innovation and Commercial Development Summary • Critical growth enabler for Tate & Lyle and our customers • Unique strengths drive innovation − Sweetener, Texturant and Health & Wellness solutions − Expertise in sugar and calorie reduction across platforms • Strong track record of commercialising in
Slide 79: Q&A Session
Q&A Session 79
Slide 80: Agenda: Interactive sessions and lunch
AGENDA Interactive sessions 1 and 2 Lunch incorporating Tate & Lyle solutions Interactive sessions 3 and 4 80
Slide 81: Interactive Sessions
Interactive Sessions Innovation Solutions Concept to commercialisation Bars and beyond Food & Beverage Solutions Primary Products Building global relationships Portfolio management 81
Slide 82: Global Operations and Driving Productivity
GLOBAL OPERATIONS AND DRIVING PRODUCTIVITY Melissa Law, President Global Operations Copyright © Tate & Lyle PLC 2018 82
Slide 83: Agenda
Agenda Overview Productivity Benefits 23 83
Slide 84: Global Operations
Global Operations • Manage global end-to-end supply chain and manufacturing footprint PRIORITY • Core strengths − Scale, cost competitive assets − Strong engineering and problem solving skills − Senior team with a broad range of experience High quality • Key priorities products at − Environment, Hea
Slide 85: Sources of Productivity Benefits
Sources of Productivity Benefits Produce, Selling, General and Procure and Fulfil Administrative Efficiencies Capital investment to reduce costs Zero-based budgeting Continuous improvement ~60% ~40% Supply chain / Procurement Simplify organisation Operational reliability US$100m productivity benefit
Slide 86: Active pipeline of productivity initiatives
Active pipeline of productivity initiatives Strong pipeline of projects: Confident of meeting targeted benefits Processes Systems • Capital investments to reduce costs and drive efficiencies • Continuous improvement projects Capabilities Investments − >170 projects in pipeline • Enhanced maintenance
Slide 87: Driving Productivity: Capital investment to reduce costs
Driving Productivity Capital investment to reduce costs Examples of ongoing and Benefits planned capital investments • New gas boiler and energy usage projects • Yield improvement These examples • New feed dryer have projected • Reduction in water usage annual benefits of • New extraction units >US$
Slide 88: Driving Productivity: Continuous Improvement
Driving Productivity Continuous Improvement Examples of continuous Benefits improvement projects • Industrial starch line productivity • Faster product change-overs These examples • Evaporation improvements have projected • Reduce product loss annual Reduce product loss benefits of (at one plant) •
Slide 89: Driving Productivity: Supply Chain and Procurement
Driving Productivity Supply Chain and Procurement Examples of supply chain Benefits and procurement projects • Enhance production planning capabilities These • Improved inventory management examples have projected • Warehouse optimisation annual benefits of >US$4m New North America • New North Ameri
Slide 90: Driving Productivity: Operational Reliability
Driving Productivity Operational Reliability Examples of operational Benefits reliability projects • Decommissioning coal boiler for gas • Feed dryer upgrade program These • Optimisation of railcar loop examples have • Electrical infrastructure improvements projected annual • Process control upgrade
Slide 91: Building Organisation and Culture
Building Organisation and Culture • Strengthened leadership team LEADERSHIP − New VP Productivity to drive sustained productivity − New leadership role in Asia Pacific to support emerging market growth • Implemented multi-year Group-wide Environment, Health and Safety program CAPABILITIES • Enhanced
Slide 92: Driving Productivity and Financials
DRIVING PRODUCTIVITY AND FINANCIALS Imran Nawaz, Chief Financial Officer Copyright © Tate & Lyle PLC 2018 92
Slide 93: Agenda
Agenda Initial Impressions Productivity Benefits Financials 93
Slide 94: Sources of Productivity Benefits
Sources of Productivity Benefits Produce, Selling, General and Procure and Fulfil Administrative Efficiencies Capital investment to reduce costs Zero-based budgeting Continuous improvement ~60% ~40% Supply chain / Procurement Simplify organisation Operational reliability US$100m productivity benefit
Slide 95: Zero-Based Budgeting
Zero-Based Budgeting Actions Outcomes Benchmark • Cultural mindset shift discretionary spend by type • Increased visibility of cost Benchmark people costs by function/region • Full ownership of spending Leverage shared services centre (COEs) • Simplified ways of working Reinforce budget accountabili
Slide 96: Cash generation and dividends
Cash generation and dividends Adjusted free cash flow1 Dividend 92% CAGR • Progressive dividend policy £196m £174m • £391m in dividends distributed to shareholders in 3 years to 31 March 2018 • Cash dividend cover increased from £53m 0.4x to 1.5x in same period FY16 FY17 FY18 1 Years ended 31 March;
Slide 97: Increasingly strong balance sheet creates flexibility
Increasingly strong balance sheet creates flexibility Forward flexibility Years ended 31 March 2016 2017 2018 • Strong cash generation Net debt (£m) 434 452 392 • Disciplined approach to M&A and capital expenditure Leverage (Net debt/EBITDA) 1.2x 0.9x 0.8x • Capacity to leverage to Return on Capital
Slide 98: Disciplined use of capital
Disciplined use of capital Capital expenditure Investing to Grow Expansion capital Capital expenditure expenditure increasing outlook FY181 FY191 Medium Actual Guidance term 35% 40% Capital Expenditure £131m £130m – £150m £130m – £170m 25% Multiple of 25% depreciation and 0.9x 0.9x – 1.1x 0.9x – 1.2
Slide 99: Clear capital allocation framework
Clear capital allocation framework Capital allocation priorities to maintain Balance investment grade credit rating Sheet Invest in organic growth Strong returns on capital employed Acquisitions, joint ventures, partnerships Progressive dividend policy Forward leverage1 range of 1x to 2x Return surp
Slide 100: Well-balanced business
Well-balanced business Investment case Primary Food & Beverage Sucralose Products Solutions Manage for stable earnings; Growth driver; Manage for cash; cash generation top and bottom line growth high return on assets EARNINGS PER SHARE1 – Accelerate growth ORGANIC RETURN ON CAPITAL EMPLOYED2 – Impro
Slide 101: Outlook for year ending 31 March 2019
Outlook for year ending 31 March 2019 Outlook for year ending 31 March 2019, as communicated on 24 May 2018, remains unchanged: • We expect growth in earnings per share1 in constant currency to be in a mid-single digit range, albeit towards the lower end due to energy and transport cost inflation in
Slide 102: Financials Summary
Financials Summary • Strong recent financial performance • Robust balance sheet • Good capital discipline ‒ Return on capital employed above 16% • Opportunity to accelerate performance ‒ Invest for growth ‒ Increased focus on cost discipline ‒ Simplify ways of working ‒ Build on disciplined use of c
Slide 103: Q&A Session
Q&A Session 103
Slide 104: Closing Remarks
CLOSING REMARKS Nick Hampton, Chief Executive Copyright © Tate & Lyle PLC 2018 104
Slide 105: Closing Remarks
Closing Remarks • Well-balanced, integrated business SHARPEN • Two important divisions with strong value propositions ACCELERATE • Three clear priorities to drive business performance SIMPLIFY • New leadership team, capabilities and culture 105