Tate & Lyle Plc · LSE:TATE
Tate & Lyle — FY2021 Earnings Presentation
44 slides from Tate & Lyle's earnings presentation, May 27, 2021
Slide 1: Results for Year Ended 31 March 2021
RESULTS FOR YEAR ENDED 31 MARCH 2021
Slide 2: Thank you for living our purpose in a year like no other
Year ended 31 March 2021 Thank you for living our purpose in a year like no other Colleagues Customers Communities 2
Slide 3: Agenda
Nick Hampton, Chief Executive Vivid Sehgal, Chief Financial Officer AGENDA Overview Financial Results Business Review and Outlook Questions 3
Slide 4: Overview
Year ended 31 March 2021 Overview • Robust performance demonstrates resilience, quality and agility of business • Food & Beverage Solutions delivers strong top-line and bottom-line growth • Primary Products resilient earnings benefiting from record year of Commodities profits • Acquisition of stevia
Slide 5: Financial delivery
Year ended 31 March 2021 Financial delivery Food & Beverage Solutions revenue +6%* Adjusted profit before tax +6%* Food & Beverage Solutions profit1 +12%* Adjusted diluted earnings per share +12%* Sucralose profit1 (9)%* Adjusted free cash flow +£3m Primary Products profit1 +5%* Full year dividend +
Slide 6: Strategic delivery
Year ended 31 March 2021 Strategic delivery New Products New Business Pipeline Revenue1 Value2 SHARPEN +21% +12% ACCELERATE Acquisitions Productivity Completed Benefits 2 US$37m SIMPLIFY 1 Constant currency 2 Estimated revenue value probability adjusted 6
Slide 7: Delivering on our priorities
Year ended 31 March 2021 Delivering on our priorities Our purpose of Improving Lives for Generations Priorities at the centre of our Covid-19 response Look after Continue • Strong focus on employee health and wellbeing our colleagues to progress and communities strategy • Global and local pandemic r
Slide 8: Good progress on 2025 purpose targets and UN SDG priorities
Year ended 31 March 2021 Good progress on 2025 purpose targets and UN SDG priorities Supporting Healthy Living Building Thriving Communities Improving nutrition 2025 target: 9m Progressing equity, diversity and inclusion 2025 target: 50% tonnes of sugar removed by our low- 1.8m and no-calorie sweete
Slide 9: Good progress on 2030 sustainability targets and UN SDG priorities
Year ended 31 March 2021 Good progress on 2030 sustainability targets and UN SDG priorities Caring for our Planet Air 2030 target: 30% Waste 2030 target: 100% 7% absolute reduction in greenhouse gas emissions (Scope 1 and 2)1 69% waste beneficially used Water 2030 target: 15% Agriculture Commitment:
Slide 10: Agenda
Nick Hampton, Chief Executive Vivid Sehgal, Chief Financial Officer AGENDA Overview Financial Results Business Review and Outlook Questions 10
Slide 11: Financial Highlights
Year ended 31 March 2021 Financial Highlights REVENUE ADJUSTED PROFIT BEFORE TAX ADJUSTED DILUTED EPS +1%* +6%* +12%* £2.8bn £335m 61.2p ADJUSTED FREE CASH FLOW NET DEBT FULL-YEAR DIVIDEND +£3m £34m lower +4.1% £250m £417m 30.8p • Statutory profit before tax at £283m, 4% lower due to net exceptional
Slide 12: Adjusted profit before tax
Year ended 31 March 2021 Adjusted profit before tax £19m £26m £1m £(2)m £(6)m £(17)m £(17)m £331m £352m £335m FY20 Food & Sucralose Sweeteners Primary Products Commodities Central costs Joint Ventures FY21 FX FY21 Adj PBT Beverage and Starches & Interest Adj PBT Adj PBT Solutions Constant Primary Pr
Slide 13: Food & Beverage Solutions
Year ended 31 March 2021 Food & Beverage Solutions TOTAL VOLUME REVENUE STRONG TOP-LINE GROWTH • +3% volume; North America +4% +3% +6%* • +6%* revenue growth ‒ North America +6%* £970m ‒ Asia, Middle East, Africa, Latin America +7%* ‒ Europe +2%* ADJUSTED OPERATING PROFIT NEW PRODUCTS REVENUE • +12%
Slide 14: Sucralose
Year ended 31 March 2021 Sucralose TOTAL VOLUME REVENUE ROBUST DEMAND • Volume in-line; revenue* 2% lower In-line (2)%* ‒ Robust demand ‒ Modestly lower pricing £151m ADJUSTED OPERATING PROFIT • Adjusted operating profit 9%* lower ‒ Revenue de-leverage (9)%* ‒ Higher production costs £55m See descri
Slide 15: Primary Products
Year ended 31 March 2021 Primary Products TOTAL VOLUME SWEETENER VOLUME RESILIENT PERFORMANCE • Total volume 5% lower (5)% (7)% ‒ Sweetener volume 7% lower ‒ Industrial starch volume 6% lower • Sweeteners and Starches adjusted operating ADJUSTED OPERATING PROFIT ADJUSTED OPERATING profit 13%* lower
Slide 16: Central, Interest, Joint Ventures, Taxation and Exceptional Items
Year ended 31 March 2021 Central, Interest, Joint Ventures, Taxation and Exceptional Items Item Change Comments Central costs In-line* • Good cost discipline • Lower interest income on cash balances, and higher gross debt, Net finance expenses £2m* higher US$200m new private placement drawn down in
Slide 17: Productivity and cost discipline
Year ended 31 March 2021 Productivity and cost discipline Productivity programme Productivity Benefits (cumulative) • Six-year programme to deliver US$150m of benefits by March 2024 Benefits realised Target • US$37m benefits delivered in fiscal 2021; US$124m over three years $150m • Cash exceptional
Slide 18: Strong balance sheet and cash management
Year ended 31 March 2021 Strong balance sheet and cash management Positive cash delivery Adjusted free cash flow • Adjusted free cash flow £3m higher at £250m • Capital expenditure in fiscal 2022 expected between £180m and £200m 9% CAGR • Net debt of £417m, £34m lower than at 31 March 2020 £247m £25
Slide 19: Robust financial delivery
Year ended 31 March 2021 Robust financial delivery • Adjusted profit before tax up 6%1 in a challenging environment • Strong revenue growth in Food & Beverage Solutions • Excellent productivity performance and cost discipline • Adjusted diluted earnings per share increased by 12%1 • Free cash flow h
Slide 20: Agenda
Nick Hampton, Chief Executive AGENDA Overview Financial Results Business Review and Outlook Questions 20
Slide 21: Agenda
Year ended 31 March 2021 Agenda 1 2 3 Progress Progress Outlook last year last 3 years 21
Slide 22: Food & Beverage Solutions
Year ended 31 March 2021 Food & Beverage Solutions Strong Performance Key Drivers of Growth Volume +3% Revenue +6%1 Profit +12%1 Accelerating Integrated Innovation Solutions • Positive top-line momentum • Customer collaboration Customer • Innovation growth partner for customers Portfolio Technical E
Slide 23: Using technology to strengthen customer connectivity
Year ended 31 March 2021 Using technology to strengthen customer connectivity • Bespoke customer webinars and seminars − Sugar reduction − Plant-based ingredients • Innovative ways to collaborate with customers − Virtual prototype tasting sessions − Video technology in application labs • Technical t
Slide 24: Accelerating innovation to support customers
Year ended 31 March 2021 Accelerating innovation to support customers New Products Innovation pipeline • Revenue growth +21%1 at £133m Value2 New Products • Strong performance across platforms increased launched − Sweeteners +41%1 18% 13 − Texturants +33%1 Launched new concepts to support customers
Slide 25: Integrated solutions for customers North America
Year ended 31 March 2021 Integrated solutions for customers North America Volume +4% Revenue +6%1 Customer Example in Dairy Sub-category focus Prototype pantry Customer solutions • Stabiliser system Ice Cream Milk Products • Fibre fortification Dairy • Sensory requirements Yoghurt Alternatives • Opt
Slide 26: Integrated solutions for customers Asia, Middle East, Africa and Latin America
Year ended 31 March 2021 Integrated solutions for customers Asia, Middle East, NorthAfrica and Latin America America Volume +2% Revenue +7%1 New focus on Building capabilities Delivering higher growth markets and expanding infrastructure for customers • Established new region Category Consumer Appli
Slide 27: Portfolio expansion
Year ended 31 March 2021 Portfolio expansion Acquisitions Food & Beverage Solutions • Global stevia business • Strengthens core platforms • Sweetener solutions • Vertically integrated • Broadens solutions for customers • Facility and labs in China • Diversification from corn • Tapioca business in Th
Slide 28: Pandemic is accelerating consumer demand for healthier food and drink
Year ended 31 March 2021 Pandemic is accelerating consumer demand for healthier food and drink Accelerating consumer trends….. 84% 95% 70% are concerned about decreased their intake of taking steps to boost health and wellbeing1 sugar in food in the past year2 their immunity health3 …for healthier f
Slide 29: Technical capabilities supporting customer reformulation and launches
Year ended 31 March 2021 Technical capabilities supporting customer reformulation and launches Sweetening Mouthfeel Fortification Sugar Reduction Clean Label Fibres +32% +23% +16% Increase in revenue for ingredients Increase in revenue for Increase in revenue1 used for sugar reduction1,2 clean label
Slide 30: Primary Products
Year ended 31 March 2021 Primary Products Steady earnings Clear strategic focus Volume (5)% Profit +5%1 Optimise product Operational mix and margins Efficiency • Resilient performance in challenging environment • Focus on customer service Customer • Strong Commodities performance Technical Target ne
Slide 31: Primary Products: core markets are stabilising
Year ended 31 March 2021 Primary Products Core markets are stabilising Sit-Down Restaurants1 North America: January to April 2021 • For Sweeteners, out-of-home consumption in North America continues to recover − Remains below pre-pandemic levels 1.2 − Expected to strengthen during 2022 financial yea
Slide 32: Solid performance in core business
Year ended 31 March 2021 Solid performance in core business Primary Products Optimise Mix Operational efficiency Technical expertise • Dextrose • Beneficially using wastewater • Customer collaboration • Green chemistry • Creating biogas • Next generation adhesives • Surfactant • Energy for facility
Slide 33: Good progress moving into growing markets
Year ended 31 March 2021 Good progress moving into growing markets Industrial Starch From printing and writing paper (volume -20%) into packaging (volume +19%) General packaging Food packaging Speciality packaging +9% +25% +12% Increasing demand for higher functional and more sustainable packaging 1
Slide 34: Continue to explore opportunities for further diversification
Year ended 31 March 2021 Continue to explore opportunities for further diversification Primary Products Growing markets New markets Bio-Products • Feedstock for fermentation • Cosmetics • Bio-PDOTM joint venture • Building materials and adhesives • Personal Care • Plant-based; replacing fossil fuels
Slide 35: Near term priorities remain unchanged
Year ending 31 March 2021 Near term priorities remain unchanged Look after our Build stronger Continue Maintain colleagues and customer to progress financial communities relationships strategy strength Emerge a stronger business 35
Slide 36: Outlook
Year ending 31 March 2021 Outlook Outlook for the year ending 31 March 2022 Despite the continuing impact of the Covid-19 pandemic, we expect: • Food & Beverage Solutions to deliver another year of progress • Sucralose to see further modest pricing pressure • In Primary Products, Sweeteners and Star
Slide 37: Purpose-led business delivering on strategy and investment case
Three years ending 31 March 2021 Purpose-led business delivering on strategy and investment case • Food & Beverage Solutions − Strong growth aligned to growing global consumer trends − Innovation model, technical capabilities and portfolio expansion SHARPEN • Primary Products − Steady earnings in la
Slide 38: Food & Beverage Solutions: top-line and bottom-line growth
Three years ending 31 March 2021 Food & Beverage Solutions Top-line and bottom-line growth Revenue1 Profit1,2 New Products3 4% 11% 18% CAGR CAGR CAGR £133m £177m £970m £942m £162m £113m £889m £143m £95m 2019 2020 2021 2019 2020 2021 2019 2020 2021 See descriptions of adjusted results on the Company’
Slide 39: Sucralose
Three years ending 31 March 2021 Sucralose Managed for cash • Key ingredient in ‘sweetener toolbox’ Profit1 (5)% CAGR • Core sugar reduction ingredient for customers £61m £63m £55m • Benefitting from strategic reset in 2016 • Market demand continues to grow 2019 2020 2021 See descriptions of adjuste
Slide 40: Primary Products
Three years ending 31 March 2021 Primary Products Steady earnings • Long-standing customer relationships Profit1 3% CAGR • Strong productivity and efficiency £158m £158m £148m • Focus on value creation • Good progress moving into growing markets 2019 2020 2021 See descriptions of adjusted results on
Slide 41: Delivering on investment case
Three years ending 31 March 2021 Delivering on investment case Attractive shareholder returns Earnings per share1,2,3 Return on Capital Employed1,3 Dividend3 Accelerate growth Improve returns Maintain progressive dividend policy 8% +5bps 2.4% CAGR average p/yr CAGR 30.8p 61.2p 17.5% 29.4p 29.6p 57.8
Slide 42: Summary
Year ended 31 March 2021 Summary • Purpose-driven, customer-focused business • Strategic progress • Productivity and cost discipline • Cash generation and strong balance sheet • Platform for future growth • Consistent delivery of investment case 42
Slide 43: Questions
Questions 43
Slide 44: Cautionary Statement
Year ended 31 March 2021 Cautionary Statement This presentation for the Full Year Results for the year ended 31 March 2021 contains certain forward-looking statements with respect to the financial condition, results, operations and businesses of Tate & Lyle PLC. These statements and forecasts involv