Tate & Lyle Plc · LSE:TATE
Tate & Lyle — H1 FY2010 Earnings Presentation
42 slides from Tate & Lyle's earnings presentation, Nov 6, 2009
Slide 1: Interim Results Presentation
Interim Results Presentation Javed Ahmed, Chief Executive Tim Lodge, Group Finance Director 6 November 2009 1
Slide 2: Introduction
Introduction Javed Ahmed, Chief Executive 6 November 2009 Good morning ladies and gentlemen and thank you all for coming here today. As you know, I joined Tate & Lyle only five weeks ago so you will realise that it is a little bit too early for me to talk to you about our strategy or the details of
Slide 3: Agenda
Agenda Introduction Javed Ahmed Operating & Financial Review Tim Lodge Outlook Tim Lodge 3 Thank you, Javed and good morning…. I will take you through a combined operating and financial review of the last six months before turning to the outlook for the remainder of the financial year. 3
Slide 4: Operating & Financial Review
Operating & Financial Review Tim Lodge, Group Finance Director 6 November 4
Slide 5: Key Results
Key Results Six months to September Continuing operations 1 2009 2008 Change Change at (£1=US$1.60) (£1=US$1.93) constant currency Adjusted operating profit 2 £148m £150m (1)% (16)% Core value added food ingredients £65m £59m 10 % (6)% adjusted operating profit Adjusted profit before tax 2 £112m £12
Slide 6: Highlights
Highlights Financial Performance • Maintained strong focus on cash management • Net debt reduced by 20% since 31 March 2009 to £987m Operational Performance • Demand from food and beverage customers steady at levels marginally below comparative period • Industrial and EU sugar markets remained chall
Slide 7: Income Statement
Income Statement Six months to September Continuing operations 1 2009 2008 At constant £m (£1=US$1.60) (£1=US$1.93) currency Sales 1 823- 1 698- (5)% Adjusted operating profit 2 148- 150- (16)% Net finance expense (36) (22) (33)% Adjusted profit before tax 2 112- 128- (25)% Exceptional items (55) --
Slide 8: Sales and Operating Profit
Sales and Operating Profit Six months to September Continuing operations 1 At At Operating £m Sales constant constant profit 2 currency currency Food & Ind. Ingredients, 939- (2)% 94- (27)% Americas Food & Ind. Ingredients, Europe 258- (19)% 28- 40 % Sugars 525- (3)% 3- (67)% Sucralose 101- 9% 35- 3
Slide 9: Operating Profit
Operating Profit 1 Six months to September Continuing operations 2 £m 27 35 6 3 1 8 £1=$1.93 £1=$1.60 150 148 2008 Currency TALFIIA TALFIIE Sugars Sucralose Central costs 2009 1 Before exceptional items and amortisation of acquired intangible assets 2 Excluding the results of International Sugar Tra
Slide 10: Food & Industrial Ingredients, Americas
Food & Industrial Ingredients, Americas Summary Sales Operating profit 1 Margin Six months to September 2009 2008 2009 2008 2009 2008 £m 939- 811- 94- 109- 10.0% 13.4% % change in constant (2)% (27)% currency 1 Before exceptional items and amortisation of acquired intangible assets y Weaker industri
Slide 11: Lower US corn prices
Food & Industrial Ingredients, Americas Lower US corn prices 800 US Corn Spot Price - January 2007 to October 2009 700 US ¢ per bushel 600 500 400 300 200 Jan07 Apr07 Jul07 Oct07 Jan08 Apr08 Jul08 Oct08 Jan09 Apr09 Jul09 Oct09 Source: Chicago Mercantile Exchange y No repeat of higher corn by-product
Slide 12: Industrial starch and ethanol
Food & Industrial Ingredients, Americas Industrial starch and ethanol y Demand for industrial starch remains depressed y Lower volumes and unit margins in ethanol y Fort Dodge – we continue to evaluate timing for final completion US Ethanol and Gasoline Spot Prices - March 2008 to October 2009 4.0 E
Slide 13: Food & Industrial Ingredients, Americas: Segmental Analysis
Food & Industrial Ingredients, Americas Segmental Analysis Sales Operating profit 1 Margin At At Six months to September 2009 constant 2009 constant 2009 2008 £m currency currency Primary Food 503- 12 % 48- (17)% 9.5 % 12.4 % Primary Industrial 155- (28)% (7) (150)% (4.5)% 7.2 % Value added Food 189
Slide 14: Food & Industrial Ingredients, Europe
Food & Industrial Ingredients, Europe Summary Sales Operating profit 1 Margin Six months to September 2009 2008 2009 2008 2009 2008 £m 258- 292- 28- 19- 10.9% 6.5% % change in constant (19)% 40% currency 1 Before exceptional items and amortisation of acquired intangible assets y Food and beverage sa
Slide 15: Lower European corn prices
Food & Industrial Ingredients, Europe Lower European corn prices • Benefited from a bumper harvest and lower net corn costs 280 European Corn Spot Price - January 2007 to October 2009 260 240 € per tonne / delivered Rouen 220 200 180 160 140 120 100 Jan07 Apr07 Jul07 Oct07 Jan08 Apr08 Jul08 Oct08 Ja
Slide 16: Food & Industrial Ingredients, Europe: Segmental Analysis
Food & Industrial Ingredients, Europe Segmental Analysis Sales Operating profit 1 Margin At At Six months to September 2009 constant 2009 constant 2009 2008 £m currency currency Primary Food 75- (27)% 14- 180 % 18.7 % 4.1 % Primary Industrial 67- (32)% 0- (100)% 0.0 % 2.2 % Value added Food 116- (1)
Slide 17: Sugars
Sugars Summary Continuing operations 1 Sales Operating profit 2 Margin Six months to September 2009 2008 2009 2008 2009 2008 £m 525- 517- 3- 7- 0.6% 1.4% % change in constant (3)% (67)% currency 1 Excluding the results of International Sugar Trading and Eastern Sugar discontinued operations in both
Slide 18: Conclusion of EU Sugar Regime Reform Process
Sugars Conclusion of EU Sugar Regime Reform Process y Signs of return to market equilibrium y Majority of sales contracted with customers to September 2010: - Expect better margins y Raw sugar supplies: - Prolonged period of high world sugar prices could increase likelihood of deficit in EU sugar ma
Slide 19: Sugars: Segmental Analysis
Sugars Segmental Analysis Continuing operations 1 Sales Operating profit 2 Margin At At Six months to September 2009 constant 2009 constant 2009 2008 £m currency currency Products 372- 2% (4) 20-% (1.1)% (1.7)% Molasses 117- (21)% 6- (45)% 5.1 % 7.6 % Value added 36- 9% 1- (67)% 2.8 % 9.1 % 525- (3)
Slide 20: Sucralose: Moving to efficient single plant footprint
Sucralose Moving to efficient single plant footprint y Mothballing of McIntosh proceeding ahead of expectations y Significant inventory held at McIntosh - Customers completing qualification of Singapore products - Will be largely consumed in second half McIntosh, Alabama Singapore 20 Turning to Sucr
Slide 21: Sucralose
Sucralose Summary Sales Operating profit 1 Margin Six months to September 2009 2008 2009 2008 2009 2008 £m 101- 78- 35- 30- 34.7% 38.5% % change in constant 9%- 3% currency 1 Before exceptional items and amortisation of acquired intangible assets y 15% volume growth - Underlying growth and customer
Slide 22: Innovation remains key
Innovation remains key Tate & Lyle helping customers to focus on… …Health & Wellness y ENRICH™ food and drink concepts delivering substantial nutritional benefits - PROMITOR™ Soluble Corn Fiber, STA-LITE® polydextrose fibre, TEAWELL green tea extract …Bottom line y OPTIMIZE™ formulation service help
Slide 23: Energy Costs
Energy Costs Continuing operations 1 At % of % of Six months to September 2009 2008 constant cost usage £m currency 2009 2009 Gas 50 52 15 % 50 % 43 % Electricity 35 26 (9)% 35 % 15 % Coal and other 15 13 6% 15 % 42 % Total 100 91 7% 1 Excluding the results of International Sugar Trading and Eastern
Slide 24: Interest, Tax and EPS
Interest, Tax and EPS Continuing operations 1 At constant Six months to September 2009 2008 currency Interest (£m) (36) (22) (33)% Interest cover ² 5.3x 7.1x Tax (£m) ³ (26) (39) 49 % Effective tax rate ³ 23.3% 30.4% Earnings per share ³ - Basic 18.4p 19.2p (14)% - Diluted 18.3p 19.1p (14)% 1 Exclud
Slide 25: Exceptional Items
Exceptional Items 1 Six months to September £m 2009 2008 Continuing operations Sucralose Mothballing of McIntosh plant (55) -- Discontinued operations Sugars Loss on disposal of International Sugar Trading -- (22) Total exceptional items (55) (22) 1 Before tax 25 In May we talked about the £60 milli
Slide 26: Balance Sheet
Balance Sheet 30 Sept 31 March £m 2009 2009 Fixed assets, goodwill and intangibles 1 783- 1 939- Working capital 443- 632- Pensions (296) (211) Total provisions (71) (31) Discontinued operations 61- 34- Net operating assets 1 920- 2 363- Net debt (987) (1 231) Other assets and liabilities (67) (119)
Slide 27: Free Cash Flow
Free Cash Flow Six months to September £m 2 46 28 146 25 4 57 357 258 148 Adjusted Dep'n Amort'n Working Share- Operating Capex Interest Tax Free cash operating capital based cash flow flow profit payments 27 If we move to the free cash flow in the six months, we generated £258 million from the cont
Slide 28: Working Capital
Working Capital ¹ Six months to September £m 2009 Decrease in inventories 52- Decrease in receivables 52- Decrease in US margin calls 26- Increase in payables 23- Other movements (7) Change in working capital 146- 1 Excluding non-cash movements 28 As you can see we have generated cash from all the m
Slide 29: Movements in Net Debt
Movements in Net Debt Six months to September £m Net cash generated £132m 74 4 1 258 48 111 1 231 987 Net debt April Free cash Cash Dividends Other Fair value and FX Net debt 2009 flow incl. outflows from other September capex disc. ops 2009 29 So, coming back to net debt and the movement over the s
Slide 30: Outlook
Outlook Tim Lodge, Group Finance Director 6 November 2009 Moving to the outlook…. 30
Slide 31: Outlook for Year to March 2010
Outlook for Year to 31 March 2010 y Overall, performance, before impact of exchange, remains on track to meet our expectations for full year y In US and European Ingredients, order patterns of food and beverage customers re-established at slightly lower levels y Global industrial starch, US ethanol
Slide 32: Question and Answers
Question and Answers Please wait for the microphone and state your name and that of your organisation 32 So, we will now take your questions. As usual, please could you wait for the microphone and state your name and that of your organisation…… 32
Slide 33: Appendix
TATE & LYLE CONSISTENTLY FIRST IN RENEWABLE INGREDIENTS. Appendix 33
Slide 34: Key Financial Indicators
Key Financial Indicators Six months to September £m, unless stated 2009 2008 Profit before tax 1,2 112- 128- Effective tax rate 1 - total operations 23.8% 29.8% - continuing operations 2 23.3% 30.4% Diluted eps 1 - continuing operations 2 18.3p 19.1p Operating cash flow - continuing operations 2 357
Slide 35: Income Statement
Income Statement Six months to September 2009 2008 £m Continuing1 Discont’d Total Continuing1 Discont’d Total Sales 1 823- 79- 1 902- 1 698- 424- 2 122- Operating profit 2 148- (1) 147- 150- 3- 153- Net finance costs (36) (1) (37) (22) 1- (21) Profit before tax 2 112- (2) 110- 128- 4- 132- Exception
Slide 36: Food & Industrial Ingredients, Americas
Food & Industrial Ingredients, Americas Continuing operations At constant Six months to September 2009 2008 £m currency Sales Primary Food 503- 388- 12 % Primary Industrial 155- 180- (28)% Value added Food 189- 164- (5)% Value added Industrial 92- 79- (4)% 658- 281- 568- 243- (2)% 36 36
Slide 37: Food & Industrial Ingredients, Europe
Food & Industrial Ingredients, Europe Continuing operations At constant Six months to September 2009 2008 £m currency Sales Primary Food 75- 98- (27)% Primary Industrial 67- 90- (32)% Value added Food 116- 104- (1)% 142- 116- 188- 104- (19)% 37 37
Slide 38: Sugars
Sugars Continuing operations 1 At constant Six months to September 2009 2008 £m currency Sales Products 372- 352- 2% Molasses 117- 132- (21)% Value added Food 36- 33- 9% 489- 36- 484- 33- (3)% 1 Excluding the results of International Sugar Trading and Eastern Sugar discontinued operations in both pe
Slide 39: Product Analysis – Sales
Product Analysis – Sales Continuing operations 1 (at actual rates) 2009 2008 Six months to September Value Total Value Primary Primary Total £m added added Sugars - Products 372- 36- 408- 352- 33- 385- - Molasses 117- -- 117- 132- -- 132- Ingredients Americas - Food 503- 189- 692- 388- 164- 552- - I
Slide 40: Product Analysis – Operating Profit
Product Analysis – Operating Profit Continuing operations 1 (at actual rates) 2009 2008 Six months to September Value Total Value Primary Primary Total £m added added Sugars - Products (4) 1- (3) (6) 3- (3) - Molasses 6- -- 6- 10- -- 10- Ingredients Americas - Food 48- 51- 99- 48- 46- 94- - Industri
Slide 41: Effective Tax Rate
Effective Tax Rate Six months to September 2009 2008 Continuing Discont’d Total Continuing Discont’d Total £m Profit before tax 50- (2) 48- 121- (18) 103- Tax (2) -- (2) (37) (1) (38) Reported tax rate 5.3% (2.3)% 5.4% 30.7% (2.8)% 36.5% Adj. profit before 112- (2) 110- 128- 4- 132- tax 1 Adjusted t
Slide 42: Debt Maturity Profile
Debt Maturity Profile As at September 2009 £m 900 Undrawn committed bank facilities Drawn committed bank facilities 800 Bonds and other 700 600 500 400 300 200 100 0 < 1 yr 1 to 2 yr 2 to 3 yr 3 to 4 yr 4 to 5 yr > 5 yr Average maturity of gross debt 4.5 years Undrawn committed facilities £512m 42 4