Tate & Lyle Plc · LSE:TATE
Tate & Lyle — FY2017 Earnings Presentation
27 slides from Tate & Lyle's earnings presentation, May 25, 2017
Slide 1: Results for the Year Ended 31 March 2017
RESULTS FOR THE YEAR ENDED 31 MARCH 2017 Copyright © Tate & Lyle PLC 2017
Slide 2: Cautionary Statement
Cautionary Statement This presentation for the Full Year Results for the year ended 31 March 2017 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
Slide 3: Agenda
Agenda Overview Javed Ahmed Financial Review and Outlook Nick Hampton Business Update Javed Ahmed 3
Slide 4: Overview: Year of strong progress and delivery
Overview: Year of strong progress and delivery Commercial Operational Financial • Speciality Food Ingredients • Very good performance across • Strong cash generation performed well manufacturing network • Particularly strong year • Continued strengthening of • Balance sheet flexibility for Bulk Ingr
Slide 5: Financial Review and Outlook
FINANCIAL REVIEW AND OUTLOOK Nick Hampton, Chief Financial Officer
Slide 6: Financial Highlights
Financial Highlights Year ended 31 March 2017 Sales Adjusted profit before tax Adjusted diluted EPS £2.8bn £271m 47.1p +2% +20% +16% Adjusted free cash flow Net debt Return on Capital Employed £174m £452m 14.3% +£121m up £18m +300bps Adjusted results and a number of other terms and performance measu
Slide 7: Adjusted Profit Before Tax Analysis
Adjusted Profit Before Tax Analysis Year ended 31 March 2017 +£40m +£38m £271m +£27m +£3m £231m +£8m £193m FY16 Adj PBT Speciality Food Bulk Joint Ventures FY17 Adj PBT FX FY17 Adj PBT Ingredients Ingredients Constant Currency See descriptions of adjusted results in Note 3 of Statement of Full Year
Slide 8: Speciality Food Ingredients
Speciality Food Ingredients Year ended 31 March 2017 Volume Sales Adjusted operating profit Adjusted operating margin +1% £996m £181m 18.2% -3%* +5%* +150bps • 8%* adjusted operating profit growth in core business and improved margins (volume +2%) • North America volume 3% lower driven by softer dem
Slide 9: Food Systems
Food Systems Challenging year Actions • Adjusted operating profit of £4m; £19m lower • Completed consolidation of European blending sites • Volume 8% lower • Site in Germany focused on applications and solutions development for customers • Weak performance in Europe − Consolidation of blending sites
Slide 10: SPLENDA Sucralose
SPLENDA® Sucralose • Business repositioned SPLENDA® Sucralose – Rigorous value-based strategy Adjusted operating profit – Transitioned to single production facility £52m – Good customer engagement +134% • More focused, low-cost and sustainable business £22m £16m • Adjusted operating profit of £52m –
Slide 11: Bulk Ingredients
Bulk Ingredients Year ended 31 March 2017 Volume Adjusted operating profit Adjusted operating profit Adjusted operating margin for Core business for Commodities +3% £121m £8m 7.3% +£28m +£17m +150bps • Strong commercial execution and manufacturing performance • Improved margins supported by low inpu
Slide 12: Cash Flow
Cash Flow Adjusted free cash flow • Improved operating cash flows For the year ended 31 March − Higher operating profits in both divisions +£45m (£27m) − Disciplined working capital management +£2m +£101m − Foreign currency translation benefit £174m • Capital expenditure £153m • Higher cash tax £53m
Slide 13: Taxation
Taxation Full year adjusted effective tax rate (ETR) 18.2% • Evolving tax legislation in US and UK • Reported tax rate credit of 9.6% driven by deferred tax credits: − £34m: recognition of UK tax losses relating to internal financing arrangements − £31m: future tax benefits from transfer of Sucralos
Slide 14: Summary and Outlook
Summary and Outlook Financial Operational • Significant profit and margin progression • Stronger commercial execution • Excellent cash generation • Good global supply chain performance • Strong balance sheet • Sharp focus on operational efficiency Outlook We are confident the Group will continue to
Slide 15: Business Update
BUSINESS UPDATE Javed Ahmed, Chief Executive 15
Slide 16: Year of strong progress and delivery
Year of strong progress and delivery Speciality Food ingredients Bulk Ingredients • Core margin progression • Strong performance in core • Growth in emerging markets • Good commercial execution • New product momentum • Operational efficiency • Sucralose progress • Improved commodities More work to d
Slide 17: Speciality Food Ingredients: North America
Speciality Food Ingredients: North America Strong underlying business • Long-standing customer base • Market-leading positions • Deep category understanding • Strong technical expertise Two key challenges 1) Market dynamics • Volume in US Food & Beverage market flat year-on-year 2) Business mix • La
Slide 18: Speciality Food Ingredients: North America
Speciality Food Ingredients: North America Targeting Strengthening higher growth sub-categories customer-facing capabilities Health & Nutrition sub-categories Selectively investing Speciality Food Ingredients North America to accelerate progress volume growth in year ended 31 March 2017 • Sales Ener
Slide 19: Speciality Food Ingredients: Emerging Markets
Speciality Food Ingredients: Emerging Markets Asia Pacific and Latin America Compound Annual Growth Rate FY11-171 • Regions of increasing scale and presence • Good growth across Asia Pacific other than Japan − Double digit volume growth in China +14% Sales • Double digit volume growth in Latin Ameri
Slide 20: New Products: Continued momentum
New Products: Continued momentum Sales growth from New Products (US$m)1 • Growth across all three platforms 200 • Expanding product families – Non-GMO Starches – CLARIA® Bliss2 105 43% – MULTIVANTAGE® Syrup CAGR 86 – Crystalline DOLCIA PRIMA® Allulose 69 • Enhanced stevia portfolio through 48 new ex
Slide 21: Bulk Ingredients: Relatively stable market dynamics
Bulk Ingredients: Relatively stable market dynamics US regular carbonated soft drinks Supply/Demand Sales volume change (%) (Years to 31 March)1 • US corn wet milling industry well-balanced CAGR 2012-17 2017 • Regular CSD consumption relatively stable -0.7% • Steady demand for paper and board -1.3%
Slide 22: Bulk Ingredients: Steady earnings delivery from core business
Bulk Ingredients: Steady earnings delivery from core business • Refined operating model with greater focus on − End-markets − Product mix and margin management • Continuous improvement programme • Investments in manufacturing efficiency − Co-generation facility in Loudon, Tennessee 22 22
Slide 23: 2020 Ambition
2020 Ambition 70% of Group profits from 30% of SFI sales from Asia US$200m sales contribution Speciality Food Ingredients1 Pacific and Latin America2 from New Products3 Year to 31 March 2017 Year to 31 March 2017 Year to 31 March 2017 54% 23% US$105m • Speciality Food Ingredients broadly in line wit
Slide 24: Conclusion
Conclusion Strong performance Clear priorities • Both business divisions performed well • Speciality Food Ingredients growth, including − North America volume • Good growth trajectory of new products − Food Systems and in emerging markets • Steady earnings from core Bulk Ingredients • Excellent cash
Slide 25: Questions
QUESTIONS 25
Slide 26: Appendices
APPENDICES TATE & LYLE 26
Slide 27: Reconciliation of alternative performance measures
APPENDIX: Reconciliation of alternative performance measures The following table shows the reconciliation of the key alternative performance measures to the most directly comparable measures reported in accordance with IFRS. Further detail can be found in note 3 of the accompanying Statement of Full