Tate & Lyle Plc · LSE:TATE
Tate & Lyle — Deutsche Bank Conference, Paris 2009
30 slides from Tate & Lyle's conference presentation, June 2009
Slide 1: Deutsche Bank Conference
Deutsche Bank Conference Tim Lodge, Group Finance Director Paris, June 2009
Slide 2: Agenda
Agenda Company overview Business environment Outlook 2
Slide 3: 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 4: Our Strategy
Our Strategy Our strategy is to build a stronger value added business on a low-cost commodity base We focus on five key business drivers: Serving our customers Operating efficiently and safely Investing in acquisitions and partnerships Investing in technology and people Growing the contribution from
Slide 5: Sustaining the health of our business
Sustaining the health of our business Building a strong platform for future growth PRIORITIES FOR FY2010 Maintain no Maximise Implement Implement Aggressively higher revenue by zero-based reduced reduce costs priority than total focus on capital working and optional safety customer expenditure capit
Slide 6: 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 6
Slide 7: 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 8: 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 9: Organisational & Reporting Structure
Organisational & Reporting Structure Pro Forma Continuing1 Sales £3 553m, Operating Profit2 £316m (pre central costs) in Year to March 2009 Food & Food & Industrial Industrial Ingredients, Ingredients, Sugars Sucralose Americas Europe (TALFIIA) (TALFIIE) Sales £1 797m Sales £539m Sales £1 048m Sales
Slide 10: Key Results
Key Results Years to 31 March Change at Continuing operations 1 2009 2008 Change constant currency Profit Before Tax 2 £247m £253m -2% -18% Core Value Added Food Ingredients £107m £89m +20% +3% Operating Profit Diluted EPS 2 38.0p 34.6p +10% -8% Dividend 22.9p 22.6p +1.3% +1.3% Net Cash Generated 3
Slide 11: Agenda
Agenda Company overview Business environment Outlook 11
Slide 12: Managing in Turbulent Times
Year to March 2009 Managing in Turbulent Times Apr 08 Jul 08 Oct 08 Jan 09 Apr 09 1H strong performance Corn price peak Good EU corn harvest Customer destocking Paper starch decline Exchange rate volatility US Ethanol capacity higher than RFS Difficult sugar market, UK retail sugar very competitive
Slide 13: Decisive Management Action
Decisive Management Action To maximise cash flow and defend short term profitability y Accelerated existing cost reduction projects y Launched new cost reduction projects y Actions to date: - Initiatives to reduce working capital - Pay freeze at all levels - Delayed completion and commissioning of F
Slide 14: Change in Working Capital
Change in Working Capital Years to March £m 2009 2008 Decrease / (increase) in inventories 113- (151) Decrease / (increase) in receivables 77- (69) US margin calls (70) 34- (Decrease) / increase in payables (44) 112- Decrease / (increase) in derivatives 6- (18) Decrease in provisions & other (51) (6
Slide 15: Food Ingredients
Food Ingredients Working with our customers in challenging times Consumer Trends • Lower cost: no compromise on taste or quality • “Value for money” alternatives to branded products • Health & Wellness Food Producer and Retailer Response • Value-focused own-label product offerings • Streamlined prod
Slide 16: Food & Industrial Ingredients, Americas
Food & Industrial Ingredients, Americas • Strong performance in 1H, due to food ingredients and higher co-product pricing • US domestic sweetener demand reduced in line with longer term patterns • Economic climate deteriorated in 2H: - Mexico volumes reduced following sudden fall in Peso - Demand fr
Slide 17: US ethanol and gasoline spot prices
Food & Industrial Ingredients, Americas US ethanol and gasoline spot prices 4.5 Spot Prices - March 2006 to May 2009 4.0 3.5 US$ per US gallon 3.0 2.5 2.0 1.5 1.0 Ethanol Chicago Wholesale Unleaded Gasoline 0.5 Jun06 Jul06 Nov06 Jun07 Jul07 Nov07 Jun08 Jul08 Nov08 May06 Aug06 Jan07 May07 Aug07 Jan08
Slide 18: Long term demand increases underpinned by RFS legislation
Food & Industrial Ingredients, Americas Long term demand increases underpinned by RFS legislation Demand for ethanol based on corn RFS Effective Corn RFS Minimum y RFS legislation allows refiners to carry Blend wall forward up to 20% of following year’s 16 volume obligation Current Blend Wall @10% 1
Slide 19: Food & Industrial Ingredients, Europe
Food & Industrial Ingredients, Europe y Lower corn prices after good 2008 harvest y Restructuring - Isoglucose quota surrendered in Greece and Netherlands - Levies charged until September 2009 y Further progress at the Food Systems businesses - Hahn and Cesalpinia integrated well 19
Slide 20: Sugars
Sugars Tate & Lyle well-placed for market post-EU reforms y EU sugar markets coming into balance y Energy costs at UK refinery doubled - UK biomass boiler: commissioning underway y Lisbon volumes and profits increased over prior year y New raw sugar supply arrangements on track y Differentiation thr
Slide 21: EU Sugar Regime
EU Sugar Regime EU25 Nutritive Sweetener Volumes Pre-reform 2005/6 – Post-reform 2009/10 21m tonnes – 17m tonnes 2% 2% 9% 20% 2% 3% 4% 73% 85% Beet sugar Isoglucose Inulin Direct consumption Cane sugar imports EU refined sugar prices and raw sugar prices both fall by 36% over 4 years Sugar year Pre-
Slide 22: SPLENDA Sucralose yield
SPLENDA® Sucralose y Volumes increased 6% over prior year: average selling prices lower y Continuing good growth in Europe >25% YIELD Breakthrough yield improvements IMPROVEMENT of over 25% Yield y Made possible by: - Investment in pilot plant - Investment in analytical research to support patent es
Slide 23: SPLENDA Sucralose market shares
SPLENDA® Sucralose High intensity sweetener market shares Global HIS Market by Region – Year to 31 March 2009 US $m Global North America Latin America EMEA Asia Pacific TOTAL HIS 1,178 427 114 278 359 Growth in year -11% -6% +1% -20% -12% SPLENDA® Sucralose 294 189 25 45 35 Growth in year -2% -6% 0%
Slide 24: Financial Position
Financial Position Continuing operations 1 • Effective interest rate 4.3% • Effective tax rate on adjusted profit 27.3% (2008: 33.2%) • Adjusted diluted EPS up 10% (down 8% in constant currency) • Exceptional items of £119m - £97m Sucralose impairment • Proposed final dividend maintained; for year i
Slide 25: Free Cash Flow
Free Cash Flow Year to March 2009 £m 5 31 117 224 451 56 298 17 154 Adjusted Dep'n / amort Working capital Share-based Operating cash Capex Interest Tax Free cash flow operating profit payments flow 25
Slide 26: Movements in Net Debt
Movements in Net Debt Year to March 2009 £m Net cash generated £245m 378 154 57 140 104 2 57 1 231 1 041 Net debt Free cash Cash from Cash from Dividends Other Trade FX Net debt April 2008 flow incl. disc ops disposals finance & March 2009 capex other 26
Slide 27: Debt Maturity Profile
Debt Maturity Profile March 2009 £m 1200 Undrawn committed bank facilities Drawn committed bank facilities 1000 Bonds and other 800 600 400 200 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 4.8 years Undrawn committed facilities £524m 27
Slide 28: Agenda
Agenda Company overview Business environment Outlook 28
Slide 29: Outlook
Outlook y Near term outlook - Relative resilience in sales to food and beverage customers - Industrial starch demand remains weak - Customer demand and net corn costs will be key factors y Key factors which will impact the second half of 2010: - Pricing in EU sugar market - 2009 corn harvests - Timi
Slide 30: Question and Answers
Question and Answers Please wait for the microphone and state your name and that of your organisation 30