Tate & Lyle Plc · LSE:TATE
Tate & Lyle — H1 FY2014 Earnings Presentation
44 slides from Tate & Lyle's earnings presentation, Nov 7, 2013
Slide 1: Results for six months ended 30 September 2013
Results for six months ended 30 September 2013 7 November 2013, London
Slide 2: Agenda
Agenda Headline Results and KPIs Javed Ahmed Financial Review Tim Lodge Operating Highlights and Progress Update Javed Ahmed Outlook Javed Ahmed 2
Slide 3: Headline Results
Headline Results Six months ended 30 September Continuing operations¹ Change 2013 20125 Change (constant (£1=US$1.54) (£1=US$1.58) currency) Adjusted operating profit2 £187m £194m - 4% - 6% - SFI up 1% in constant currency - BI down 11% in constant currency Adjusted profit before tax3 £173m £178m -
Slide 4: Key Performance Indicators
Key Performance Indicators Six months ended 30 September KPI Measure 2013 20124,5 Change6 Growth in Speciality Sales £519m £471m + 7% Food Ingredients Financial performance1 Profitability Adjusted operating profit £187m £194m - 6% Working capital Lengthened by Cash conversion cycle2 43 days 42 days
Slide 5: Financial Review
Financial Review Tim Lodge, Chief Financial Officer
Slide 6: Income Statement
Income Statement Six months ended 30 September Continuing operations1 5 2013 2012 At constant £m, unless stated (£1=US$1.54) (£1=US$1.58) currency Sales 1,737 1,631 3% 2 Adjusted operating profit - SFI 112 108 1% - BI 92 101 (11%) - Central (17) (15) (9%) 187 194 (6%) 3 Net finance expense (14) (16)
Slide 7: Speciality Food Ingredients
Speciality Food Ingredients Six months ended 30 September At £m, unless stated 2013 2012 Reported constant currency Impact of Sales 519 471 10% 7% exchange: Sales 1 £15m higher, Adjusted operating profit 112 108 3% 1% Operating profit Margin1 21.5% 22.9% £3m higher Sales2 up by 7% with operating p
Slide 8: Bulk Ingredients
Responsibilities: Bulk Ingredients PP data : EW P&L data : VD Six months ended 30 September At £m, unless stated 2013 2012 Reported constant currency Impact of Sales 1,218 1,160 5% 2% exchange: Sales 1 £36m higher, Adjusted operating profit 92 101 (9%) (11%) Operating profit Margin1 7.5% 8.7% £3m hi
Slide 9: Corn and co-products
Corn and co-products Co-product sales1 increased by 5% to £281 million US and European Corn – spot prices 1000 300 Significant fall in US and European corn 800 250 EU corn €/mt US corn c/bu 200 prices on expectation of bumper harvests 600 150 400 100 200 50 US corn (c/bu) EU corn (€/mt) Producti
Slide 10: Interest and Tax – Continuing Operations
Interest and Tax – Continuing Operations1 Six months ended 30 September Interest At £m, unless stated 2013 2012 constant currency 2 Net finance expense (14) (16) 14% Lower interest charge as a Add back result of repayment of £100 - Net hedge unwind - (1) million bond Underlying net interest (14) (
Slide 11: Business Transformation
Responsibilities: Business Transformation EW check with JW Six months ended 30 September Total cumulative £m Six months to costs to Sept 2013 Sept 2013 IS/IT & Global Shared Services 20 98 Total 20 98 P&L exceptional 6 39 Capital 14 59 Total 20 98 11
Slide 12: Balance Sheet
Balance Sheet £m, unless stated 30 Sept 2013 31 Mar 2013 30 Sept 2012 Goodwill, intangibles and fixed assets 1,273 1,320 1,231 Working capital 385 532 382 Pension deficit (232) (265) (217) Other provisions (32) (35) (25) Other 28 27 25 Assets and liabilities held for sale - 1 3 Net operating assets
Slide 13: Free Cash Flow
Free Cash Flow Six months ended 30 September 2013 Continuing operations1 £m 114 5 EBITDA £239m 23 52 64 14 6 12 329 239 187 Adjusted Dep'n / Exceptionals Working Pensions Share-based Operating Capex & Net Tax Free cash 2 operating amort capital payments cash flow intangibles interest Paid flow profi
Slide 14: Movements in Net Debt
Responsibilities: Movements in Net Debt AN Six months ended 30 September £m (16) (7) (88) (10) 25 (479) 239 (336) Net debt March Free cash flow Dividends Discont’d, Net share Other Exchange Net debt 2013 Acquisitions & purchases Sept 2013 Disposals 14
Slide 15: Capital allocation priorities
Capital allocation priorities Maintain investment grade credit rating Invest in the Provide a buffer against working capital volatility business Invest to drive organic growth Progressive Recognise importance of dividend to shareholders dividend policy Grow dividend over time taking into acc
Slide 16: Operating Highlights
Operating Highlights Javed Ahmed, Chief Executive
Slide 17: Speciality Food Ingredients Highlights
Speciality Food Ingredients Highlights Speciality Food Ingredients Sales £519m Volumes up 5% with sales1 growth of 7% at £519 million Strong growth in Europe, Asia and Latin America Food systems (19%) Slightly lower volumes in the US 99 Adjusted operating profit1 1% higher at £112 million 10
Slide 18: Starch-based speciality ingredients
Starch-based speciality ingredients Sales1 up 13% to £314 million with volume growth of 6% Speciality food starches Volume growth across all regions with strong growth in Europe, Asia and Latin America Emerging market growth reflects strong underlying consumer demand for convenience Speciali
Slide 19: High-intensity sweeteners
High-intensity sweeteners Sales1 up 1% at £106 million with volume growth of 6% Good long-term growth potential for high-intensity sweeteners Strong focus on calorie-reduction globally Tate & Lyle well placed to address this trend SPLENDA® Sucralose Volumes held back by soft US beverage co
Slide 20: Food systems
Food systems Sales1 down 3% to £99 million with volumes down 8% Focus on higher margin blends led to lower volumes Profit ahead due to improved mix and effective control of input costs Good level of customer interaction through new facility in Roggenhorst, Germany New Tate & Lyle Howbetter v
Slide 21: Bulk Ingredients Highlights
Bulk Ingredients Highlights Bulk Ingredients Sales £1,218m Sales1 up 2% to £1,218 million on flat volumes Adjusted operating profit1 down 11% to £92 Sweeteners Co-products million 281 (50%) (23%) Lower US sweetener volumes as a result of reduced 604 demand for soft beverages 333 Industrial S
Slide 22: Sweeteners
Sweeteners Sales1 down 1% to £604 million with volumes 4% lower US Carbonated Soft Drinks Volume2 2013 vs 2012 (%) US sweeteners – sales1 2% lower at £518 million 13 weeks to 13 weeks to 13 weeks to March June September Lower HFCS volumes reflects lower carbonated soft 0% drink consumption -1% -
Slide 23: Industrial starches, acidulants and ethanol
Industrial starches, acidulants and ethanol Sales1 up 5% at £333 million with volumes up 4% Industrial starches Higher margins in US driven by firmer pricing Margins in Europe squeezed by lower prices Ethanol Overall improvement in market conditions Margins ahead of comparative period
Slide 24: Delivering our strategy
Delivering our strategy Javed Ahmed, Chief Executive
Slide 25: Recap: Growth in Speciality Food Ingredients from three main sources
Recap: Growth in Speciality Food Ingredients from three main sources Grow Speciality Food Ingredients Deeper understanding and analysis Customer Closer interaction and collaboration Right organisation, skills and processes Innovation Focus resources/expertise behind key platforms Build inf
Slide 26: Focus on the Customer
Focus on the Customer Customer visits to Global Commercial Customer visits to six main and Food Innovation Center in Chicago1 facilities globally by region2 19% Asia and Latin 41% America Europe 40% US 38% Frequency and quality of Interaction is collaboration is increasing becoming more global 1 Six
Slide 27: Significant change in customer perception
Significant change in customer perception Impact of visiting Commercial and Food Innovation Centre in Chicago on customer satisfaction1 Exceeds expectations As expected Almost as expected Independent survey1 of 197 Speciality Food Ingredients customers in North America 100% 8% 10% 90% 80% 29% As
Slide 28: Focus on Innovation
Focus on Innovation New product development pipeline % split of projects by platform1 − Innovation pipeline remains healthy − Average size of each project higher today than year ago 26% Sweeteners Recent launches and portfolio expansion 28% − PULPIZ™ Pulp Extender Health & − PromOat® Beta Glucan
Slide 29: Focus on new markets
Focus on new markets Continued strong growth in Asia and Latin America − Strong volume growth in H1 − Increasing our coverage and direct relationships with customers Expanding local presence and infrastructure − New Applications and technical service facilities are helping to strengthen customer
Slide 30: Delivering on our strategy for Bulk Ingredients
Delivering on our strategy for Bulk Ingredients Bulk Ingredients’ strategy is to provide stable, long-term cash flow to fund growth in Speciality Food Ingredients Bulk Ingredients has delivered a steady performance over the last few years through: A relentless focus on efficiency and cost redu
Slide 31: Steady progress delivering on our long-term strategy
Steady progress delivering on our long-term strategy Good sales growth in Speciality Food Ingredients Strong, double digit volume growth in emerging markets Innovation pipeline remains healthy Continued momentum in customer collaboration Strong balance sheet provides strategic flexibility
Slide 32: Outlook for year ending 31 March 2014
Outlook for year ending 31 March 2014 Speciality Food Ingredients We expect to deliver growth in volumes, sales and profits across all regions for the full year Bulk Ingredients In North America we expect solid demand for liquid sweeteners and stable demand for our other products In Europe, lo
Slide 33: Q&A
TATE LYLE Q&A
Slide 34: Supporting information
Supporting information
Slide 35: Key Financial Indicators
Key Financial Indicators Six months ended 30 September 5 £m, unless stated 2013 2012 1,2 Profit before tax 173 178 1,2 Effective tax rate - continuing operations 18.7% 18.9% Diluted EPS - continuing operations1,2 29.9p 30.5p 2 Operating cash flow - continuing operations 329 228 Net debt 336 386 Net
Slide 36: Exceptional Items
Responsibilities: Exceptional Items MP Six months ended 30 September £m, unless stated 2013 2012 Exceptional Items Continuing operations Business transformation costs (6) (10) Gain on disposal - Columbian acidulants joint venture - 8 Exceptional costs from continuing operations (6) (2) Discontinued
Slide 37: Change in Working Capital
Responsibilities: Change in Working Capital AN Six months ended 30 September Continuing operations1 £m, unless stated 2013 2012 Decrease in inventories 151 10 Decrease/(increase) in receivables 32 (48) (Increase)/decrease in US margin calls (3) 22 (Decrease)/increase in payables (46) 20 Movement in
Slide 38: Income Statement
Responsibilities: Income Statement P&L data : VD Six months ended 30 September 4 2013 2012 £m, unless stated Cont'd Discont'd Total Cont'd Discont'd Total Sales 1,737 - 1,737 1,631 10 1,641 1 Operating profit 187 - 187 194 3 197 Net finance costs2 (14) - (14) (16) - (16) 3 Profit before tax 173 - 17
Slide 39: Profit before tax
Responsibilities: Profit before tax VD? Six months ended 30 September 2013 Continuing operations1 5 £m, unless stated 2012 Forex Activity 2013 - SFI 108 3 1 112 - BI 101 3 (12) 92 - Central (15) - (2) (17) Adjusted operating profit2 194 6 (13) 187 Net finance expense3 (16) (1) 3 (14) 4 Adjusted prof
Slide 40: Reconciliation of adjusted information
Reconciliation of adjusted information Continuing operations1 3 Six months to 30 Sept 2013 Six months to 30 Sept 2012 Adjusting Adjusting £m Reported Adjusted2 Reported Adjusted2 items items Sales 1,737 - 1,737 1,631 - 1,631 Operating profit 176 11 187 186 8 194 Net finance expense (18) 4 (14) (18)
Slide 41: Exchange rates
Exchange rates 30 Sept 31 Mar 30 Sept £m 2013 2013 2012 Closing rates US$ 1.62 1.52 1.61 Euro 1.19 1.18 1.25 used to translate Balance Sheet Average rates US$ 1.54 1.57 1.58 Euro 1.18 1.24 1.25 used to translate Income Statement 41
Slide 42: Exchange Sensitivity
Exchange Sensitivity Estimated annual movement caused by a one cent movement in the US$/€ on the translation of continuing operations’ profits £m impact on PBITEA US$ EUR Speciality Food Ingredients 1.0 0.1 Bulk Ingredients 0.7 - Central 0.1 - Impact on operating profit before interest & tax1 1.8 0.
Slide 43: Debt Maturity Profile
Responsibilities: Debt Maturity Profile MD September 2013 Undrawn committed bank £m 2013 2012 facilities £m Drawn committed bank 700 facilities Average net debt in period 439 421 600 Bonds and other Effective interest rate on gross debt 3.9% 4.1% 500 400 At period end 300 Average maturity of total g
Slide 44: IAS19
Responsibilities: IAS19 MD £m, unless stated Deduct IAS19 cost pension incl. in H1 FY13 interest reported H1 FY13 reported credit results restated Operating profit 187 - (1) 186 Net finance expense (15) (1) (2) (18) Profit before tax 172 (1) (3) 168 The change to IAS 19 modifies the basis on which