Tate & Lyle Plc · LSE:TATE
Tate & Lyle — FY2019 Earnings Presentation
39 slides from Tate & Lyle's earnings presentation, May 23, 2019
Slide 1: Results for Year Ended 31 March 2019
RESULTS FOR YEAR ENDED 31 March 2019
Slide 2: Overview
YEAR ENDED Overview 31 MARCH 2019 • Group delivered solid financial progress ̶ Top-line momentum in Food & Beverage Solutions SHARPEN ̶ Sucralose performed strongly ̶ Primary Products profit lower due to challenging market conditions ̶ Productivity benefits offset cost inflation ACCELERATE • Strong
Slide 3: Financial delivery
Financial delivery Year ended 31 March 2019 Sales +2%* Adjusted diluted earnings per share +4%* Adjusted profit before tax +4%* Return on capital employed +90bps Food & Beverage Solutions volume +3% Adjusted free cash flow +£16m Primary Products sweetener volume Flat Full year dividend +2.4% See des
Slide 4: Agenda
Nick Hampton, Chief Executive Imran Nawaz, Chief Financial Officer AGENDA Business Update Financial Results Outlook and Summary Questions 4
Slide 5: Improving Lives for Generations
Our Purpose Improving Lives for Generations Through our purpose, we believe we can successfully grow our business and have a positive impact on society. It inspires us and informs what we do. Working in partnership with our customers, we use our ingredients, expertise and people to bring our purpose
Slide 6: Improving Lives For Generations
Improving Lives For Generations Our fibres have helped remove the equivalent of 170 billion calories from customers’ products in the last four years Our sucralose has removed the equivalent of 85 trillion calories over the last 26 years Bio-PDOTM,1 is helping a global sportswear brand make more sust
Slide 7: Sustainable business
Sustainable business Sustainable Responsible Healthier Lower Community farming supply chain lifestyles emissions support Sustainable Research into Child Co-generation Providing nutritious acreage for sustainability of health education to reduce meals for people US corn supply stevia supply chain pro
Slide 8: Markets
MARKETS 8
Slide 9: Food & Beverage Solutions: Major global consumer trends
Food & Beverage Solutions Major global consumer trends HEALTHY LIVING CLEAN LABEL SUGAR REDUCTION PLANT POWER 67% 71% 81% 65% US supplement users would Consumers read Consumers say taste has Growth in product launches prefer to get vitamins from ingredient labels2 greatest impact on food in Latin Am
Slide 10: Portfolio well-placed to provide solutions to meet trends
Food & Beverage Solutions Our portfolio is well-placed to provide solutions to meet these trends Sweeteners Health & Wellness • Replace sugars • Replace sugar to reduce calories while maintaining taste • Reduce calories Value • Match sweetness • Add nutrition through fibre enrichment • Optimise body
Slide 11: Increasing use of fibre to enrich food and replace sugar
Food & Beverage Solutions Increasing use of fibre to enrich food and replace sugar Global market growth Food & Beverage Solutions Product launches by category with low/no/reduced Fibre volume growth sugar or calorie claims + fibre ingredient1 Years ended 31 March 2017 to 2019 (CAGR) Years ended 31 M
Slide 12: Clean label driving strong growth in texturants
Food & Beverage Solutions Clean label driving strong growth in texturants Global market growth Food & Beverage Solutions Product launches with Clean Label claims1 Volume growth Years ended 31 March 2017 to 2019 (CAGR) Years ended 31 March 2017 to 2019 (CAGR) Europe +57% North America +8% +4% Middle
Slide 13: Primary Products: Market dynamics more challenging
Primary Products Market dynamics in the 2018 calendar year more challenging Market dynamics US corn wet milling industry 2012-17 calendar years 2018 calendar year Stable demand Weaker demand • Decline in HFCS demand in US offset by • Volume in US regular carbonated soft exports to Mexico and corn sy
Slide 14: Portfolio management driving steady earnings
Primary Products Portfolio management driving steady earnings Actions Grind diversification Customer, product and category mix • Optimise customer and product mix Capacity expansion • Margin expansion opportunities +20% Operational efficiency Complete mid-2019 • Capital investment to drive cost effi
Slide 15: Three Priorities: Sharpen, Accelerate, Simplify
Three Priorities SHARPEN ACCELERATE SIMPLIFY 15
Slide 16: Sharpen Focus on Customers
Sharpen Focus on Customers Interaction Food & Beverage Solutions • Significant increase in top-to-top meetings at CEO, Sales growth3 in year ended 31 March 2019 President and R&D levels • 39% increase in calls and/or face-to-face meetings per month with customers to discuss growth opportunities1 13%
Slide 17: Sharpening Focus on the Customer
Sharpening Focus on the Customer Reformulation • Supported customer to deliver 30% sugar reduction • Solution based on PROMITOR® fibre • Innovation driving growth partnership − Reformulation − Geographies − New products 17
Slide 18: Sharpening Focus on the Customer: Expanded Offering
Sharpening Focus on the Customer Expanded Offering Product Examples Leading stevia portfolio • Stevia partnership with Sweet Green Fields ̶ Significantly expanded customer offering Yoghurts Tea beverages ̶ Acquired 15% shareholding • Launched TASTEVA® M Stevia Sweetener Jams Protein bars Infusion dr
Slide 19: Accelerate Portfolio Development
Accelerate Portfolio Development Pipeline Open Innovation • Open Innovation delivered five development agreements with external partners ̶ Sweetener testing ̶ New sources of dietary fibre More line extensions and More external partnerships next generation projects to catalyse innovation • Positive F
Slide 20: Simplify the Business
Simplify the Business Systems Processes Organisation • New Transportation System • On-site water wells • Consolidate and streamline teams • ~US$3m benefits per annum • ~US$1m benefits per annum • Faster decision-making • Supply chain efficiency • Lower external purchase costs • Serve customers bette
Slide 21: Summary
Summary • Stronger customer focus Integrated business managed to optimise returns • Improving operational execution • Faster innovation • Productivity programme on track SHARPEN ACCELERATE SIMPLIFY • Purpose-driven organisation • Increasingly dynamic culture Purpose-driven | New leadership team | Dy
Slide 22: Agenda
AGENDA Business Update Financial Results Outlook and Summary Questions 22
Slide 23: Financial Highlights
YEAR ENDED Financial Highlights 31 MARCH 2019 SALES ADJUSTED PROFIT BEFORE TAX ADJUSTED DILUTED EPS £2.76bn £309m 52.0p +2%* +4%* +4%* ADJUSTED FREE CASH FLOW NET DEBT FULL YEAR DIVIDEND (PENCE) £212m £337m +2.4% +£16m £55m lower 29.4p • Inflationary headwinds of £25m from materials and transportati
Slide 24: Adjusted Profit Before Tax
YEAR ENDED Adjusted Profit Before Tax 31 MARCH 2019 +£2m £309m +£7m £(18)m +£2m £307m +£17m Sweeteners and Starches +£3m £(7)m £296m Commodities £(11)m FY18 * Food & Sucralose Primary Products Interest/ Joint Ventures FY19 FX FY19 Adj PBT Beverage Central costs Adj PBT Adj PBT Solutions Constant Cur
Slide 25: Food & Beverage Solutions
YEAR ENDED Food & Beverage Solutions 31 MARCH 2019 TOTAL VOLUME SALES TOP-LINE MOMENTUM • 3% volume growth +3% +5%* ‒ North America +3% £889m ‒ Asia Pacific and Latin America +15% ‒ Europe, Middle East and Africa 2% lower ADJUSTED OPERATING PROFIT NEW PRODUCTS SALES • 3%* adjusted operating profit g
Slide 26: Sucralose
YEAR ENDED Sucralose 31 MARCH 2019 TOTAL VOLUME SALES STRONG RESULTS • Volume 16% higher +16% +13%* ‒ Benefits of programme to optimise production and sale of excess inventory £164m ‒ Increasing industry demand ADJUSTED OPERATING PROFIT • Adjusted Operating Profit 11%* higher ‒ Softer pricing due to
Slide 27: Primary Products
YEAR ENDED Primary Products 31 MARCH 2019 TOTAL VOLUME SWEETENER VOLUME CHALLENGING ENVIRONMENT • Sweeteners and Starches adjusted In line In line operating profit 5% lower* with comparative period with comparative period ‒ Mix management and cost discipline offsetting cost headwinds ‒ £4m insurance
Slide 28: Central, Interest, Joint Ventures and Taxation
YEAR ENDED Central, Interest, Joint Ventures and Taxation 31 MARCH 2019 Item Change Comment Central costs £(11) million • Strong cost discipline and lower insurance costs Net finance charges £(6) million • Benefit of prior year pension contribution • DuPont Tate & Lyle Bio-Products performed well Jo
Slide 29: Productivity Programme
Productivity Programme YEAR ENDED US$100m over four years 31 MARCH 2019 Procure, Selling, General and Produce and Fulfil Administrative Efficiencies • Capital investments to reduce costs • Implemented zero-based budgeting • Continuous improvement (>300 projects) • Benchmarked indirect costs to best-
Slide 30: Strong balance sheet
YEAR ENDED Strong balance sheet 31 MARCH 2019 Forward flexibility Years ended 31 March 2017 2018 2019 • Sustained cash generation Adjusted free cash flow (£m) 174 196 212 • Capital expenditure in year of £130m Net debt (£m) 452 392 337 ̶ In fiscal 2020, expected to be between £140m and £160m • Stron
Slide 31: Exceptional Items
YEAR ENDED Exceptional Items 31 MARCH 2019 Of which: Estimated cash £ million Total Cash in FY19 in future years Focus portfolio Oat ingredients disposal (43) 3 (1) (including impairment) Simplify business Restructuring programme* (13) (6) (25) Gain on sale and leaseback of railcars 14 16 ̶ Asset re
Slide 32: Impact of IFRS 16 Leases
Impact of IFRS 16 Leases Item Change Comment Net debt ~ £170m increase • Operating lease liabilities come on balance sheet Leverage ~ 0.3x increase • Balance sheet fundamentals unchanged • Increases as lease payments no longer included, Adjusted free cash flow ~ £30-35m increase offsetting increase
Slide 33: Consistent performance delivered over last three years
Consistent performance delivered over last three years Adjusted profit before tax1,3 Adjusted earnings per share1,2,3 Adjusted free cash flow1,3 8% 6% 10% CAGR CAGR CAGR £309m 52.0p £212m £296m 49.4p £196m 46.2p £264m £174m 4 4 4 4 FY17 FY18 FY19 FY17 FY18 FY19 FY17 FY18 FY19 1 See descriptions of a
Slide 34: Year of solid financial delivery
YEAR ENDED Year of solid financial delivery 31 MARCH 2019 • Adjusted profit before tax 4%* higher • Adjusted diluted earnings per share 4%* higher • Adjusted free cash flow up £16m at £212m • Net debt £55m lower at £337m • Final dividend up 2.5% to 20.8p per share; full-year at 29.4p See description
Slide 35: Agenda
AGENDA Business Update Financial Results Outlook and Summary Questions 35
Slide 36: Outlook
Outlook For year ending 31 March 2020 We expect earnings per share growth1,2 in constant currency to be broadly flat to low-single digit • Continuing progress in Food & Beverage Solutions • Gains from productivity initiatives Offsetting: • Lower Sucralose profits • Continued market challenges in Pri
Slide 37: Summary
Summary Year of progress SHARPEN • Solid financial performance • ‘Sharpen, Accelerate, Simplify’ progressing well • Purpose-driven and more dynamic culture ACCELERATE Looking ahead • Execute against key priorities • Manage two divisions to optimise overall returns SIMPLIFY • Invest in long-term grow
Slide 38: Questions
Questions TATE LYLE
Slide 39: Cautionary Statement
Cautionary Statement This presentation for the Full Year Results for the year ended 31 March 2019 contains certain forward-looking statements with respect to the financial condition, results, operations and businesses of Tate & Lyle PLC. These statements and forecasts involve risk and uncertainty be