Tate & Lyle Plc · LSE:TATE
Tate & Lyle — FY2024 Earnings Presentation
42 slides from Tate & Lyle's earnings presentation, May 23, 2024
Slide 1: Results for the year ended 31 March 2024
RESULTS FOR THE YEAR ENDED 31 MARCH 2024 Nick Hampton, Chief Executive Dawn Allen, Chief Financial Officer
Slide 2: Cautionary statement
Year ended 31 March 2024 Cautionary statement This presentation for the Full Year Results for the year ended 31 March 2024 contains certain forward-looking statements with respect to the financial condition, results, operations and businesses of Tate & Lyle PLC. These statements and forecasts involv
Slide 3: Agenda
Year ended 31 March 2024 Agenda 01. Overview 02. Financial results 03. Strategic progress and Outlook 04. Summary and Q&A 3
Slide 4: Key headlines
Year ended 31 March 2024 Key headlines ▪ Strong financial performance in challenging external environment ▪ Transformation into focused speciality business complete with sale of Primient interest ▪ Intention to start share buyback programme to return Primient sale proceeds to shareholders ▪ Good pro
Slide 5: Financial performance
Year ended 31 March 2024 Financial performance Strong profit, cash and productivity delivery Revenue Adjusted EBITDA1 Free Cash Flow Productivity (2)% +7% +£49m US$41m lower growth increase savings 5 1. Adjusted EBITDA (earnings before interest, tax, depreciation and amortisation); 2. Percentage cha
Slide 6: Sale of Primient
Year ended 31 March 2024 Sale of Primient ▪ Sale of remaining 49.7% interest in Primient to KPS Capital Partners agreed ▪ Tate & Lyle to receive cash of US$350 million (c.£279 million) − Values 49.7% stake at 6.5x EV/EBITDA1, ahead of valuation on sale of initial controlling stake in April 2022 (5.1
Slide 7: Share buyback programme
Year ended 31 March 2024 Share buyback programme ▪ Intention to return net cash proceeds from Primient sale to shareholders − To be delivered through an on-market share buyback programme − Programme to commence on completion of Primient sale ▪ Decision consistent with capital allocation policy ▪ Fur
Slide 8: Transformation to speciality business complete
Year ended 31 March 2024 Transformation to speciality business complete Customer Innovation Portfolio Fully-focused solutions acceleration strengthened speciality Step up in customer collaboration >US$300m invested over six years Four strategic acquisitions business Sale of remaining interest in Pri
Slide 9: Strategic delivery
Year ended 31 March 2024 Strategic delivery Innovation and solution selling to customers New Products as % of Food & Investment1 in innovation Solutions2 revenue from new business Beverage Solutions revenue and solutions selling wins out of new business pipeline 16% +5% 21% FY28 ambition: 20% FY28 a
Slide 10: Purpose delivery
Year ended 31 March 2024 Purpose delivery (11)% (20)% 7.9m Scope 1 and 2 Scope 3 Tonnes of sugar absolute reduction absolute reduction removed from diets using our fibres in GHG emissions1 in GHG emissions1 and no/low-calorie sweeteners2 2030 target: (30%) 2030 target: (15%) 2025 target: 9.0m 45% 90
Slide 11: Leading on sustainability
Year ended 31 March 2024 Leading on sustainability Larger, faster emissions reduction on a 1.5oC trajectory Critical for global food systems Global GHG emissions4 ▪ New targets for GHG1 emissions announced in May 2024 30% ▪ Targets validated as science-based by SBTi2 on 1.5oC trajectory from food sy
Slide 12: Agenda
Year ended 31 March 2024 Agenda 01. Overview 02. Financial results 03. Strategic progress and Outlook 04. Summary and Q&A 12
Slide 13: Financial headlines
Year ended 31 March 2024 Financial headlines ▪ Profit growth in line with guidance despite a challenging external environment ▪ Acceleration in productivity programme, with savings well ahead of target ▪ Strong financial discipline and focus on cost reduction ▪ Excellent cash delivery with cash conv
Slide 14: Financial highlights
Year ended 31 March 2024 Financial highlights Robust financial performance Revenue Adjusted EBITDA Adjusted profit before tax (2)% +7% +18% £1,647 million £328 million £287 million Adjusted earnings per share Return on capital employed Free cash flow +18% (20)bps +£49m 55.5 pence 17.4% £170 million
Slide 15: Food & Beverage Solutions
Year ended 31 March 2024 Food & Beverage Solutions Resilient performance Revenue (2)% ▪ Revenue (2)% lower at £1,359m ‒ (5)% from volume and price mix By driver By region o (6)% volume impact of consumer demand softness and customer de-stocking Volume (6)% North America (3)% o 1% mix management and
Slide 16: Sucralose
Year ended 31 March 2024 Sucralose Attractive returns ▪ Underlying performance steady Revenue (1)% ▪ Revenue (1)% lower at £174m Volume In-line ‒ Volume in-line ‒ Customer mix led to a modest decline in price mix Price mix (1)% ▪ Adjusted EBITDA at £52m, (4)% lower ‒ Impact of cost inflation 16 Reve
Slide 17: Primary Products Europe
Year ended 31 March 2024 Primary Products Europe Continuing to optimise ▪ Revenue (12)% lower at £114m Revenue (12)% ‒ Pricing stronger overall; sweetener pricing softer in H2 ▪ Lower volume, positive price mix Volume (15)% ‒ Ongoing transition to speciality ingredients ‒ Lower co-product volume Pri
Slide 18: EBITDA performance
Year ended 31 March 2024 EBITDA performance £4m £20m £343m (£3m) £(15)m £328m £322m +7% FY23 Food & Sucralose Primary Products FY24 FX FY24 Adj EBITDA Beverage Europe Adj EBITDA Adj EBITDA Solutions Constant Currency 18 EBITDA is earnings before interest, tax, depreciation and amortisation; FY is ye
Slide 19: Productivity savings
Year ended 31 March 2024 Productivity savings Strong culture of productivity Progress on 5-year productivity ▪ Delivered productivity savings of US$41m target to 31 March 2028 − 70% from operational and supply chain efficiencies US$150m − 30% from strong cost management and SG&A savings Target incre
Slide 20: Taxation and Exceptional items
Year ended 31 March 2024 Taxation and Exceptional items Adjusted effective tax rate Pre-tax exceptional charges 21.6% £(24)m ▪ 170bps higher than prior year ▪ £(21)m restructuring costs to drive organisational − Increase in the headline UK corporation tax rate improvements and productivity benefits
Slide 21: Minority holding in Primient joint venture
Year ended 31 March 2024 Minority holding in Primient joint venture ▪ Share of adjusted profit 53%1 higher at £35m ‒ Strong customer contracting in 2023 and 2024, robust sweetener demand and improved operational performance ‒ Partially offset by higher finance charges ▪ Received US$74m cash dividend
Slide 22: Excellent free cash flow performance
Year ended 31 March 2024 Excellent free cash flow performance Adjusted free cash flow Adjusted free cash flow1 Free cash conversion2 FY24 vs FY233 +£49m 85% £112m £(39)m £170m +23ppts £(29)m £(1)m £170m ▪ Working capital £112m lower £6m ‒ Disciplined inventory management £121m ‒ Improved demand plan
Slide 23: Net debt and Full-year dividend
Year ended 31 March 2024 Net debt and Full-year dividend Net debt Full-Year dividend £153m 19.1p per share ▪ Net debt down £85m from 31 March 2023 ▪ Recommending final dividend of 12.9p ▪ Flexibility to invest in growth ▪ Full-year dividend of 19.1p, 3.2% increase ‒ 0.5x net debt to EBITDA ratio ▪ U
Slide 24: Consistent approach to capital allocation
Year ended 31 March 2024 Consistent approach to capital allocation Capital allocation to prioritise growth opportunities and drive shareholder value Acquisitions, Return Invest in Progressive joint ventures, surplus capital organic growth dividend policy partnerships to shareholders Maintain strong
Slide 25: Robust financial performance
Year ended 31 March 2024 Robust financial performance ▪ Profit growth in line with guidance despite challenging environment ▪ Quality of financial performance improved: − Adjusted EBITDA margin of 21% for Food & Beverage Solutions − Accelerated productivity savings with target increased by 50% to US
Slide 26: Agenda
Year ended 31 March 2024 Agenda 01. Overview 02. Financial results 03. Strategic progress and Outlook 04. Summary and Q&A 26
Slide 27: Strategic progress
Year ended 31 March 2024 Strategic progress 1 2 3 Transformation Solutions-based Investing in technology, into focused speciality business with innovation and capacity business complete customers accelerating for long-term growth 27
Slide 28: Transformation complete
1 Year ended 31 March 2024 Transformation complete Our purpose Transforming lives through the science of food Our business Growth-focused speciality food and beverage solutions business Our platforms Global leader in sweetening, mouthfeel and fortification 28
Slide 29: Large and attractive addressable market
1 Year ended 31 March 2024 Large and attractive addressable market Global speciality food ingredient market Tate & Lyle’s four core categories represent 70% (US$13bn) of US$19bn addressable market1 Market US$75bn addressable by Tate & Lyle’s three platforms Beverage Dairy ~6%1 CAGR US$19bn ~6%1 CAGR
Slide 30: Portfolio directly aligned to consumer trends
1 Year ended 31 March 2024 Portfolio directly aligned to consumer trends Consumer preference Solutions required Delivered by our portfolio ▪ Sugar and calorie reduction Healthy ▪ Nutrition improvement ▪ Label improvement Sweetening ▪ Cost optimisation Tasty ▪ Enhance texture ▪ Mouthfeel experience C
Slide 31: Clear strategic focus
1 Year ended 31 March 2024 Clear strategic focus Strategic focus A leading and differentiated speciality food and beverage solutions business Platform focus Sweetening Mouthfeel Fortification Soups, Sauces Bakery Category focus Beverage Dairy and Dressings and Snacks 31
Slide 32: Three-year performance ahead of 5-Year ambition
1 Year ended 31 March 2024 Three-year performance ahead of 5-Year ambition 2021-24 2021-24 Revenue CAGR1 Adjusted EBITDA CAGR1 11% Tate & Lyle Group 10% 5-Year ambition to FY282: 4-6% 5-Year ambition to FY282: 7-9% 12% Food & Beverage Solutions 10% 32 1. Financial years ended 31 March (continuing op
Slide 33: Innovation growth
2 Year ended 31 March 2024 Innovation growth 9 13% 44% New Products Increase in revenue Of new business launched from the from New Products pipeline involved innovation pipeline on a like-for-like basis1 New Products 33 1. Like-for-like basis is when no products are removed from disclosure due to ag
Slide 34: Solutions business wins increasing
2 Year ended 31 March 2024 Solutions business wins increasing ▪ Solutions new business wins up 3ppts 21% ▪ Strong solutions performance in Asia, Middle East, Africa and Latin America Revenue from new business wins ▪ Solutions chassis development continuing from solutions ▪ Stronger solutions-based c
Slide 35: Customer collaboration
2 Year ended 31 March 2024 Customer collaboration Customer challenge ▪ Reduce sugar and fat ▪ Preserve iconic texture and taste ▪ No change to production process Our solution ▪ 30% less sugar ▪ 30% less fat ▪ 50% added fibre 35
Slide 36: Customer experience strengthening
2 Year ended 31 March 2024 Customer experience strengthening ▪ Technical support >90% The Tate & Lyle team is extremely responsive and ▪ Product quality collaborative and willing to jump in as an arm of the development team to of customers globally support any project needs. believe Tate & Lyle ▪ Pr
Slide 37: Investing for long-term growth
3 Year ended 31 March 2024 Investing for long-term growth Technology Innovation Capacity New automated lab in Singapore New Customer Innovation and New capacity online for Non-GMO providing enhanced mouthfeel Collaboration Centre opened PROMITOR® Soluble Fibres solutions for customers in Jakarta, In
Slide 38: Focused on delivering our growth-focused strategy
Year ended 31 March 2024 Focused on delivering our growth-focused strategy Speciality transformation complete; significant growth opportunties Organic growth Inorganic growth ▪ Customer solutions ▪ Acquisitions ▪ New Products ▪ Joint ventures ▪ New capacity ▪ Partnerships ▪ Stronger capabilities ▪ O
Slide 39: Outlook
Tate & Lyle Outlook Year ending 31 March 2025 Context Outlook Volume Revenue ▪ We expect to deliver in constant currency: ▪ 2024 customer contracts ▪ Period of input cost inflation ▪ Customer de-stocking ended − Revenue slightly lower than prior year ▪ Now seeing input cost deflation ▪ Consumer conf
Slide 40: Agenda
Year ended 31 March 2024 Agenda 01. Overview 02. Financial results 03. Strategic progress and Outlook 04. Summary and Q&A 40
Slide 41: Summary
Year ended 31 March 2024 Summary ▪ Strong financial performance in challenging external environment ▪ Transformation to speciality business complete ▪ Intention to start share buyback programme ▪ Solutions strategy working well ▪ Leading in sustainability ▪ Well-positioned at the centre of future of
Slide 42: Q&A
Q&A 42