Tate & Lyle Plc · LSE:TATE
Tate & Lyle — Deutsche Bank Conference, Paris 2008
33 slides from Tate & Lyle's conference presentation, Jun 19, 2008
Slide 1: Deutsche Bank Conference
Deutsche Bank Conference Tim Lodge, Director of Investor Relations Paris, 19 June 2008
Slide 2: Agenda
Agenda Company overview Reshaping the business Outlook and conclusion 2
Slide 3: Who is Tate & Lyle?
Who is Tate & Lyle? Tate & Lyle is a world-leading manufacturer of renewable food and industrial ingredients. We use innovative technology to transform corn and sugar into value added ingredients for customers in the food, beverage, pharmaceutical cosmetic, paper, packaging and building industries.
Slide 4: Our Strategy
Our Strategy Our strategy is to build a stronger value added business on a low-cost commodity base We focus on five key business drivers: Serving our customers Operating efficiently and safely Investing in acquisitions and partnerships Investing in technology and people Growing the contribution from
Slide 5: What are value added ingredients?
What are value added ingredients? Those ingredients that utilise technology or intellectual property enabling our customers to produce distinctive products and Tate & Lyle to obtain a price premium and / or sustainable higher margins. HEALTHIER GREENER TASTIER LIGHTER STRONGER 5
Slide 6: Where we compete: Food and Beverage
Where we compete Food and Beverage Sweeteners Acidulants Stabilisers Enrichers Sugar, HFCS and other Citric acid Starches “Better for you” cereal sweeteners – adds acidic or sour – provide texture and Dietary fibres – sweeten food and taste to food and mouthfeel beverages. Also used beverages and is
Slide 7: Where we compete: Industrial
Where we compete Industrial Bio-fuels Paper ingredients Bio-materials Other applications Ethanol Starches Bio-PDO™ Acidulants – used as an – give strength and – used in applications – used in cleaning fluids oxygenate in finish to paper and from plastics and Bio-gums motor vehicle card textiles to d
Slide 8: Organisational & Reporting Structure
Organisational & Reporting Structure Pro Forma Continuing# Sales £3 424m, Operating Profit* £317m (pre central costs) in Year to March 2008 Food & Food & Industrial Industrial Ingredients, Ingredients, Sugars Sucralose Americas Europe (TALFIIA) (TALFIIE) Sales £1 386m Sales £461m Sales £1 429m Sales
Slide 9: Key Results
Key Results Year to 31 March 2008 Continuing operations* vs FY 2007 Profit Before Tax1 £244m Down 7% Core Value-Added Food Ingredient £89m Up 13 % Operating Profit Constant Ingredients, Americas currency £186m Up 13% Operating Profit Diluted EPS1 32.7p Down 8% Dividend 22.6p Up 1.1p, 5% Net debt £1
Slide 10: Agenda
Agenda Company overview Reshaping the business Outlook and conclusion 10
Slide 11: Strong Progress in delivering our strategy
Strong Progress in delivering our strategy “To build a stronger value added business on a low cost commodity base” Year to 31 March 2008: y Strategic reshaping largely complete y New 4 division structure in place y 4 year major capital investment / restructuring / disposal programme nearing completi
Slide 12: Strategic Progress
Strategic Progress Calendar of significant events FY06 Custom Ingredients and Cesalpinia EU acquired; Bio-PDO™ facility construction completed; Eastern Sugar closed FY07 Expansion of McIntosh, Alabama SPLENDA® Sucralose facility complete 1Q08 Redpath sold; 80% G. C. HAHN Acquired; Singapore SPLENDA®
Slide 13: Transforming Tate & Lyle: Peak capital expenditure
Transforming Tate & Lyle Peak in major capital expenditure programme Fort Dodge £140m European sugar cranes / bio-mass boiler £26m Sagamore & Loudon £100m £m DuPont T&L £30m 300 SPLENDA® Sucralose £140m 250 200 150 100 50 0 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09E Capex Depreciation Capex/ Depreciat
Slide 14: Investment Expenditure Net of Disposals
Transforming Tate & Lyle Investment Expenditure Net of Disposals Years to March £m 2006 2007 2008 2009E Total Ingredients, Acquisitions 36 36 Americas Major capex 35 78 106 51 270 Ingredients, Acquisitions 29 2 75 106 Europe Disposals (203) (203) Sugars Acquisitions 4 2 1 1 8 Major capex 3 13 10 26
Slide 15: Food & Industrial Ingredients, Americas
Food & Industrial Ingredients, Americas y Fourth year of record profits y Higher corn costs passed on through price rises y Balance between “commodity flywheel” and value added y Acceptable range of predictability of profit y Cornbelt technology introduced at Loudon and Fort Dodge y Focus is deliver
Slide 16: US Corn Prices
Food & Industrial Ingredients, Americas US Corn Prices Nearby Future Prices Mar 06 to Mid June 2008 725 675 US cents per bushel 625 575 525 475 425 375 325 275 225 175 Mar-06 May-06 Jul-06 Sep-06 Nov-06 Jan-07 Mar-07 May-07 Jul-07 Sep-07 Nov-07 Jan-08 Mar-08 May-08 Source: Chicago Mercantile Exchang
Slide 17: Ethanol profits still generate a good return
Food & Industrial Ingredients, Americas Ethanol profits still generate a good return Spot Prices March 2006 to Mid June 2008 5 4 Ethanol Chicago Wholesale Unleaded Gas US $ 3 2 1 Mar-06 May-06 Jul-06 Sep-06 Nov-06 Jan-07 Mar-07 May-07 Jul-07 Sep-07 Nov-07 Jan-08 Mar-08 May-08 • Last year’s supra-nor
Slide 18: EU Sugar Regime
Eu Sugar Regime EU25 Nutritive Sweetener Volumes Pre-reform 2005/6 – Post-reform 2009/10 21m tonnes – 17m tonnes 2% 2% 9% 20% 2% 3% 4% 73% 85% Beet sugar Isoglucose Inulin Direct consumption Cane sugar imports EU refined sugar prices and raw sugar prices both fall by 36% over 4 years Sugar year Jul0
Slide 19: Food & Industrial Ingredients, Europe
Food & Industrial Ingredients, Europe y Now five Eaststarch plants plus Netherlands, Greece and Morocco y Working with partners to optimise inherent volatility of unconnected corn and sugar markets y Focus on investing in value added and economies of scale y Cesalpinia and G. C. HAHN provide access
Slide 20: European Grain Prices
Food & Industrial Ingredients, Europe European Grain Prices Spot Prices Mar 06 to Mid June 2008 280 260 Corn Milling Wheat Feed Wheat € per tonne / delivered Rouen 240 220 200 180 160 140 120 100 80 Mar-06 Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Jun-08 Source: Home-Grown Cereals Auth
Slide 21: Sugars
Sugars y Significant progress on EU sugar reforms; difficult market in short term y Good progress in securing raw sugar supply from October 2009 y Superior economic basis for cane refining y Further differentiation of cane – Fairtrade and lower carbon footprint 21
Slide 22: Sucralose: High intensity sweetener market
Sucralose High intensity sweetener market Manufacturers’ sales by product Manufacturers’ sales by geography FY 2008 - $1.3bn FY 2007 - $1.0bn North Latin Asia US $m Global EMEA 4% 1% 1% America America Pacific 11% 10% TOTAL HIS 1,324 455 113 349 407 23% 28% 11% YOY growth +32% +3% +25% +25% +113% $3
Slide 23: SPLENDA Sucralose: Elements of Competitive Advantage
SPLENDA® Sucralose Elements of Competitive Advantage SPLENDA® Sucralose brand Regulatory & Specifications Economy of Scale Technology Know-how Patents 23
Slide 24: Significant longer term opportunities
Significant longer term opportunities Bio materials Expansion in Asia Pacific Region Custom Ingredients Expansion into Eastern Europe Cesalpinia ? 24
Slide 25: Agenda
Agenda Company overview Reshaping the business Outlook and conclusion 25
Slide 26: Outlook for Year to March 2009
Outlook for Year to 31 March 2009 % of FY2008 Operating Division Outlook profit^ Ingredients, 59% Further progress anticipated Americas Ingredients, Profits in TALFIIE at current levels in H1; 13% Europe H2 determined by new harvest cereal costs EU sugar difficult H1 followed by market 7% Sugars rea
Slide 27: Conclusion
Conclusion • Successful implementation of business transition largely complete • Focus for management: deliver returns on the invested asset base • Significant longer term opportunities in pipeline 27
Slide 28: Question and Answers
Question and Answers Please wait for the microphone and state your name and that of your organisation 28
Slide 29: Appendix
TATE LYLE Appendix
Slide 30: Food & Industrial Ingredients, Americas
Food & Industrial Ingredients, Americas Years to March £m Sales Operating profit1 Margin At At 2008 2008 constant constant 2008 2007 £m £m currency currency Primary Food 651 +27% 76 +39% 11.7% 11.2% Primary Industrial 309 +4% 42 +2% 13.6% 13.7% Value added Food* 293 +13% 68 +0% 23.2% 25.3% Value add
Slide 31: Food & Industrial Ingredients, Europe
Food & Industrial Ingredients, Europe Years to March £m Sales Operating profit1 Margin At At 2008 2008 constant constant 2008 2007 £m £m currency currency Primary Food 168 +19% 14 -49% 8.3% 19.4% Primary Industrial 138 +41% 6 +74% 4.3% 3.3% Value added Food 95 +19% 13 +12% 13.7% 13.5% 401 +26% 33 -2
Slide 32: Sugars
Sugars Years to March £m Sales Operating profit1 Margin At At 2008 2008 constant constant 2008 2007 £m £m currency currency Refining 572 +24% 15 -35% 2.6% 5.4% Trading and Other 784 -16% 4 -88% 0.5% 2.8% Value added 73 +1% 5 -15% 6.8% 9.7% 1 429 -2% 24 -59% 1.7% 4.0% • Small EU refining profit exclu
Slide 33: Sucralose
Sucralose Years to March £m Sales Operating profit1 Margin At At 2008 2008 constant constant 2008 2007 £m £m currency currency Value added 148 +6% 66 -3% 44.6% 48.3% 148 66 • 6% sales growth after absorbing impact of customer destocking • Profits affected by higher fixed costs from Singapore and pat