Tate & Lyle Plc · LSE:TATE
Tate & Lyle — DKIB Consumer Staples Conference 2008
31 slides from Tate & Lyle's conference presentation, Apr 4, 2008
Slide 1: DKIB Consumer Staples Conference
DKIB Consumer Staples Conference Tim Lodge, Director of Investor Relations Frankfurt, 4 April 2008
Slide 2: 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 3: Strategic Vision
Strategic Vision To grow our business and create long term value for our shareholders. We focus on five key business objectives: Serving our customers Operating efficiently and safely Investing in acquisitions and partnerships Investing in technology and people Growing the contribution from value ad
Slide 4: 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 4
Slide 5: 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 6: 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 7: Nearing the end of a year of transition
Nearing the end of a year of transition Reducing exposure to regulated markets in NAFTA Redpath £8m profit in FY2007 Sale completed in April 2007 £131m consideration Occidente £6m profit in FY2007 Agreement reached for sale (Tate & Lyle’s share) of 49% shareholding £46m consideration Reducing exposu
Slide 8: Tate & Lyle Today
Tate & Lyle Today Pro Forma Continuing# Sales £1,622m, Operating Profit* £142m in Six Months To September 2007 Food & Food & Industrial Industrial Ingredients, Ingredients, Sucralose Sugars Americas Europe (TALFIIA) (TALFIIE) Sales £671m Sales £208m Sales £70m Sales £713m Profit £84m Profit £26m Pro
Slide 9: Key Results
Key Results Six months to 30 September 2007 vs six months to Continuing business* 30 September 2006 Profit Before Tax1 £120m Down 14% Down 1.7 Constant Margin1 8.5% currency % points Core Value-Added Food Ingredient Operating Profit £45m Up 18% Diluted EPS1 15.8p Down 23% Dividend 6.5p Up 0.3p, 5% *
Slide 10: Key Factors
Key Factors Six Months To 30 September 2007 Ingredients, Americas • Strong performance in US value-added food ingredients – profit up 17% • Normalisation of US ethanol prices and margins • Weaker HFCS volume offset by price increases Ingredients, Europe • Good first half but increasing European cere
Slide 11: Sales & Operating Profit by Division
Pro Forma Continuing Operations Sales & Operating Profit by Division Six Months to September 2007 Sales £1,662m Operating profit* £142m (£14m central costs) 671 40% 84 54% 16% 13% 208 70 4% 26 14 713 9% 32 43% 21% Food & Industrial Ingredients, Americas Sugars, Europe Sucralose Food & Industrial Ing
Slide 12: Sucralose
Sucralose Six Months to September At At £m 2007 2006 reported constant 4% Sales rates currency Sales 70 73 -4% +4% Profit before interest* 32 34 -6% 0% Margin* 45.7% 46.6% -90pts • Successful Singapore plant start up - better rate of ramp-up than planned 21% PBI* • Proved capacity of both Singapore
Slide 13: Sugars
Sugars Six Months to September At At £m 2007 2006 reported constant 43% Sales rates currency Sales 713 800 -11% -5% Profit before interest*- Products 14 16 -13% -Trading - 18 -100% -Total 14 34 -59% -56% Margin* 2.0% 4.3% -230pts • Positive reaction to repair of EU Sugar Regime reforms 9% PBI* • Dif
Slide 14: Food & Industrial Ingredients, Europe
Food & Industrial Ingredients, Europe Six Months to September Continuing business At At £m 2007 2006 reported constant 13% Sales rates currency Sales 208 157 +32% +37% Profit before interest* 26 23 +13% +13% Margin* 12.5% 14.6% -210pts • EU Sugar Regime impacts sweetener commodity pricing price cap
Slide 15: Food & Industrial Ingredients, Americas
Food & Industrial Ingredients, Americas Six Months to September At At 40% Sales £m 2007 2006 reported constant rates currency Sales 671 615 +9% +18% Profit before interest* 84 93 -10% -2% Margin* 12.5% 15.1% -260pts • Ethanol profit decline 54% PBI* •Astaxanthin loss of £5m (including closure costs)
Slide 16: Food & Industrial Ingredients, Americas: Value added progress
Food & Industrial Ingredients, Americas Value added continues to progress well Sales* (rebased to 100 in 2004) Operating profit* (rebased to 100 in 2004) Value added Commodity Ethanol Value added Commodity Ethanol 160 200 140 180 160 120 140 100 120 80 100 60 80 60 40 40 20 20 0 0 2004 2005 2006 200
Slide 17: Major Investments – Ingredients, Americas
Major Investments – Ingredients, Americas Organic investments Sagamore £60m Expansion to increase capacity for On stream value added food starches. Will see benefit in 2H08. Loudon £40m Expansion to increase capacity for On stream February 2008 value added ingredients and ethanol. Will see benefit i
Slide 18: Major Investments – Sugars and Sucralose
Major Investments – Sugars and Sucralose Organic investments Thames £26m cranes Boiler reduces carbon emissions from energy use at Thames refinery & biomass boiler by 70% Full capacity by March 2009 SPLENDA® Sucralose Alabama plant Doubled capacity at McIntosh, expansion £40m Alabama Completed end M
Slide 19: Capital Expenditure vs Depreciation
Capital Expenditure vs Depreciation Fort Dodge £140m European sugar cranes / bio-mass boiler £26m Sagamore & Loudon £100m DuPont T&L £30m £m SPLENDA® Sucralose £140m 350 300 250 200 150 100 50 0 FY02 FY03 FY04 FY05 FY06 FY07 FY08f FY09f Capex Depreciation Capex/ depreciation 0.6 0.7 1.1 1.1 2.0 2.6
Slide 20: Outlook for year to 31 March 2008
Outlook for year to 31 March 2008 Sugars • Continuing oversupply of sugar in the EU market but latest EU moves positive Ingredients, Europe • Good results from Hahn and Cesalpinia but high European corn prices squeeze second half Ingredients, Europe margins Ingredients, Americas • Further progress i
Slide 21: Outlook
Outlook • Second half outturn broadly similar to first half • Strategy to focus on value-added leaves us well placed to create value 21
Slide 22: Appendices
TATE & LYLE CONSISTENTLY FIRST IN RENEWABLE INGREDIENTS
Slide 23: Income Statement
Income Statement Six Months to September Continuing business # £m 2007 2006 At reported At constant (£1=$2.00) (£1=$1.85) rates currency Continuing operations: Sales 1,662 1,645 +1% +8% Adjusted operating profit* 142 168 (15)% (10)% Net finance costs (22) (19) (16)% (22)% Adjusted profit before tax*
Slide 24: Operating profit
Operating profit* Six Months to September Continuing business £m (11) 3 (2) (18) 2 168 US$ decline and international sugar trading impact profits 142 £1=$1.85 £1=$2.00 H12006 Currency TALFIIA TALFIIE Sugars Central costs H1 2007 * Adjusted operating profit before exceptional items and amortisation o
Slide 25: Product Analysis – Operating profit
Product Analysis – Operating profit Six Months to September UNAUDITED FIGURES Continuing operations (at actual 2007 rates) Operating Profit 2007 2006 Value Total Value £m Primary Primary Total added added Sugars - Products 11 3 14 13 3 16 - Trading 0 - 0 16 - 16 Ingredients - Food 46 45 91 44 38 82
Slide 26: Cash Flow
Cash Flow Six Months £m to September 2007 2006 (£1=$2.00) (£1=$1.85) Operating Profit* 142 168 Depreciation / Amortisation 50 41 Working Capital 71 70 Net interest (25) (12) Share based payments 2 3 Tax (32) (36) Capex (135) (134) Free Cash Flow/(Outflow) (continuing ops) # 73 100 Net disposals/(acq
Slide 27: Balance Sheet
Balance Sheet As at 30 Sep As at 31 Mar £m 2007 2007 Property, Plant & Equipment 1,123 1,217 Intangible Assets 298 232 Other Net Assets 477 385 Net Assets Held for Sale - 61 1,898 1,895 Net Debt 840 900 Shareholders’ Funds 1,058 995 1,898 1,895 27
Slide 28: European Grain Prices
Food & Industrial Ingredients, Europe European Grain Prices Spot Prices 24 months to End March 2008 Corn Feed Wheat 260 240 € per tonne / delivered Rouen 220 200 180 160 140 120 100 Mar-06 Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Data: HGCA 28
Slide 29: US corn prices
Food & Industrial Ingredients, Americas US corn prices Nearby Futures Prices 24 months to End March 2008 600 575 550 525 US cents per bushel 500 475 450 425 400 375 350 325 300 275 250 225 200 Mar-06 Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Source: Chicago Board of Trade 29
Slide 30: Ethanol profits still generate good returns
Food & Industrial Ingredients, Americas Ethanol profits still generate good returns Spot Prices 24 months to End March 2008 Ethanol Chicago Wholesale Unleaded Gas 4.5 4 3.5 3 $ 2.5 2 1.5 1 Mar 2006 Jun 2006 Sep 2006 Dec 2006 Mar 2007 Jun 2007 Sep 2007 Dec 2007 Mar 2008 • Last year’s “supra-normal” p
Slide 31: The Corn Wet Milling Process
The Corn Wet Milling Process Corn Wet Milling Corn By-Product Corn By-Product Separation Corn Oil Starch Corn Feed Product Physical / Chemical Modification Glucose Syrup Fermentation Refining Bio-PDO™ HFCS Value Added Citric Acid Polydextrose Modified Starches Ethanol Crystalline Dextrose Xanthan Gu