Tate & Lyle PLC · LSE:TATE
Tate & Lyle — H1 FY2007 Earnings Presentation
30 slides from Tate & Lyle's earnings presentation, Nov 1, 2006
Slide 1: Interim Results Presentation
Interim Results Presentation 1 November 2006 Interim Results six months ended 30 September 2006 Page 1
Slide 2: Interim Results Presentation: Chief Executive introduction
Interim Results Presentation Iain Ferguson, Chief Executive 1 November 2006 Good morning and thank you for coming here today. I hope the change of date hasn’t taken any of you by surprise. This is going to be the first set of results presented by John Nicholas as Group Finance Director. No doubt you
Slide 3: Key Results
Key Results Six months to 30 September 2006 vs 2005 Operating Profit1 £193m Up 26% Food & Industrial £87m Up 58% Ingredients, Americas2 Margin 9.5% Up 1.3pts Diluted EPS2 24.3p Up 25% Dividend 6.2p Up 0.3p or 5.1% £95m lower since Net debt £771m 31 March 2006 1 Before interest, exceptional items and
Slide 4: Interim Results Presentation: Group Finance Director
Interim Results Presentation John Nicholas, Group Finance Director 1 November 2006 Thanks Iain. Good morning. As Iain said, this is a good set of results with improvements in most of the key financial measures. The only change in financial reporting standards we have adopted is IFRIC 4, which has re
Slide 5: Income Statement
Income Statement Six Months to September £m 2006 2005 Sales 2,039 1,868 +9.2% Operating Profit* 193 153 +26.1% Margin 9.5% 8.2% +1.3 pts Net Interest (20) (17) +17.6% Profit before taxation* 173 136 +27.2% * Before exceptional items and amortisation of acquired intangibles 5 So into the detail, oper
Slide 6: Income Statement
Income Statement Six Months to September £m 2006 2005 Profit before taxation* 173 136 +27.2% Amortisation (4) (2) Exceptional items - 1 Taxation (52) (39) Minority interests (2) (2) Net Profit 115 94 +22.3% Diluted earnings per 24.3 19.5 +24.6% share* (pence) Dividend per share 6.2 5.9 +5.1% (pence)
Slide 7: Segmental Analysis
Segmental Analysis Six Months to September 2006 Sales £2,039m Operating profit* £193m 30% 45% 615 87 4% 73 151 7% 413 21% 40 20% 33 787 26 7 17% 39% 13% 4% Food & Industrial Ingredients, Americas Sucralose Sugars, Americas & Asia Sugars, Europe Food & Industrial Ingredients, Europe * Before exceptio
Slide 8: Food & Industrial Ingredients, Americas
Food & Industrial Ingredients, Americas Six Months to September £m 2006 2005 Sales 615 547 +12.4% Operating Profit* 87 55 +58.2% Margin* 14.1% 10.1% +4pts • Plants operating at near maximum capacity • Tight HFCS market • Strong growth in value added food ingredients • Custom Ingredients profits £3m
Slide 9: Food & Industrial Ingredients, Europe
Food & Industrial Ingredients, Europe Six Months to September £m 2006 2005 Sales 413 394 +4.8% Operating Profit* 40 28 +42.9% Margin* 9.7% 7.1% +2.6pts • Lower depreciation charge as a result of the March 2006 asset impairment • Higher prices offset by high cereal and energy costs • Cesalpinia profi
Slide 10: Sucralose
Sucralose Six Months to September £m 2006 2005 Sales 73 74 -1.4% Operating Profit* 33 33 - Margin* 45.2% 44.6% +0.6pts • Sales in line with comparative period • Start up costs of £5m for capacity expansions • Expect demand growth in H2 * Before exceptional items and amortisation of acquired intangib
Slide 11: Sugars, Americas & Asia
Sugars, Americas & Asia Six Months to September £m 2006 2005 Sales 151 129 +17.1% Operating Profit* 7 13 -46.2% Margin* 4.6% 10.1% -5.5pts • Canada inventory mark to market loss £6m, underlying business stable • Vietnam and Mexico profits broadly in line with comparative period * Before exceptional
Slide 12: Sugars, Europe
Sugars, Europe Six Months to September £m 2006 2005 Sales 787 724 +8.7% Operating Profit* 26 24 +8.3% Margin* 3.3% 3.3% - • Strong profits from sugar trading • Lower underlying margins at the refineries reflecting EU sugar regime changes • Eastern Sugar contributed £6m in line with comparative perio
Slide 13: Cash Flow
Cash Flow Six Months to September £m 2006 2005 Operating Profit* 193 153 Depreciation / Amortisation 52 64 Working Capital 74 (53) Net Interest (12) (17) Share based payments 3 2 Tax (43) (52) Capex (128) (111) Free Cash Flow 139 (14) Investments / Acquisitions (7) 3 Dividends (68) (65) Issue and Pu
Slide 14: Property, Plant & Equipment
Property, Plant & Equipment £m H1 FY 2006 H2 FY 2006 H1 FY 2007 Brought Forward 1,264 1,358 1,217 Capex 111 165 128 Acquisitions - 13 - Disposals - (2) - Depreciation (63) (62) (50) Impairment - (272) - Charge Exchange / Other 46 17 (74) Carried Forward 1,358 1,217 1,221 14 I have set out here the f
Slide 15: Net Assets
Net Assets £m H1 FY 2007 H1 FY 2006 Property, Plant & 1,221 1,358 Equipment Intangible Assets 253 193 Other Net Assets 225 127 Net Assets excluding Debt 1,699 1,678 Net Debt 771 615 Shareholder’s Funds 928 1,063 1,699 1,678 15 On this slide you will see the net assets and the net debt which at £771m
Slide 16: Key Financial Statistics
Key Financial Statistics Six Months to September 2006 2005 Effective Tax Rate 30.2% 29.0% Interest cover* 9.7x 9.0x EBITDA / Net Interest 12.3x 12.8x Net debt / EBITDA§ 1.6x 1.4x Gearing 83% 58% RONOAω 21.0% 18.3% * Before exceptional items and amortisation of acquired intangibles § Annualised, befo
Slide 17: Interim Results Presentation: Chief Executive
Interim Results Presentation Iain Ferguson, Chief Executive 1 November 2006 Interim Results six months ended 30 September 2006 Page 17
Slide 18: Agenda
Agenda y Bio-PDO™ y SPLENDA® Sucralose y Improved HFCS outlook y The US ethanol market y Impact of EU sugar reform y Cereal pricing y Outlook 18 Thank you John. This slide lists the topics I would like to cover today. Let me start with an update on Bio-PDO™. Interim Results six months ended 30 Septe
Slide 19: Bio-PDO
Bio-PDO™ Cosmetics and Packaging Resins Personal Care Carpets Textiles 19 The commissioning of our joint venture Bio-PDO™ plant in Loudon, Tennessee has been completed on schedule. I am pleased to be able to confirm that commercial quality production has been achieved and we expect to ship our first
Slide 20: SPLENDA Sucralose
SPLENDA® Sucralose y Full capacity at McIntosh, Alabama available by end FY 2007 y Singapore plant construction on schedule for completion in January 2007 y Commission and ramp-up will take 12 months y Patent litigation bearing fruit 20 John has already covered current trading; let me update you on
Slide 21: Improved HFCS outlook in US
Improved HFCS outlook in US y Resolution of long-running Mexican trade dispute good news for US HFCS industry y From 1 January 2008, all US HFCS quotas into Mexico removed y Mexican HFCS market potentially 1m+ tonnes y US industry front-end grind capacity tight at mid-90s% y We intend to improve mar
Slide 22: Impact of EU Sugar Reform
Impact of EU Sugar Reform y Eastern Sugar y Food & Industrial Ingredients, Europe y Cane sugar refineries 22 As you can see from this slide, I would like to cover the impact on the three major businesses that are affected: •Eastern Sugar, where we announced our closure plans last month •Ingredients
Slide 23: Exit from Eastern Sugar
Exit from Eastern Sugar y Consultation commenced to renounce c280k tonne annual quotas y Termination of beet processing and decision on restructuring aid expected February 2007 y Estimate of financial impact should be available late November / early December 2006 23 Let me recap on the announcement
Slide 24: Ingredients, Europe
Ingredients, Europe y £263m impairment charge on assets in FY 2006 y Exploring full or partial disposal 24 Last year we took a £263m impairment charge on these assets and announced that we were undertaking a fundamental review of the options for this business. That review has been completed and we h
Slide 25: Investing in Cane Sugar Refining
Investing in Cane Sugar Refining y Raw sugar cranes y Raw sugar supplies y Destination markets 25 We have already advised the market that we believe that our cane refineries offer a competitive and sustainable economic model for sugar production in Europe both under the current regime and, in what i
Slide 26: European Grain Prices
European Grain Prices Spot prices 12 months to Mid-October 2006 € per tonne Corn Delivered Euros Wheat Delivered Rouen Euros 180 160 140 120 100 Mid Oct-05 Jan-06 Apr-06 Jul-06 Mid Oct-06 Data: HGCA 26 World cereal prices are increasing on higher demand estimates, particularly from ethanol manufactu
Slide 27: US Corn Prices
US Corn Prices Nearby Futures Prices 12 Months to Mid-October 2006 US Cents per Bushel 320 300 280 260 240 220 200 180 Mid Oct-05 Jan-06 Apr-06 Jul-06 Mid Oct-06 Data:Chicago Board of Trade 27 As I said earlier, one of the main drivers of corn price rises has been increased demand estimates, mainly
Slide 28: US Ethanol Prices
US Ethanol Prices Spot Prices 12 months to Mid-October 2006 US$ per gallon Ethanol Chicago Wholesale Unleaded Gas 4.5 4 3.5 3 2.5 2 1.5 1 Mid Oct-05 Jan-06 Apr-06 Jul-06 Mid Oct-06 Data: Company Estimates 28 You can see that the spot selling price for ethanol has traded in a very wide range over the
Slide 29: Outlook
Outlook Strong start to the year All expansion projects on track We continue to view the future with confidence We remain committed to grow value added profit by 30% in FY 2007 We expect further progress in H2 29 As I said at the beginning of my presentation, we have started the year with a very goo
Slide 30: Question and Answers
Question and Answers Please wait for the microphone and state your name and that of your organisation. 30 John and I are now ready to take questions. As usual could you wait for the microphone to arrive and state your name and that of your firm before asking a question. Interim Results six months en