Our CEO Nick Hampton reflects on an unprecedented year in every sense – from how the world’s been turned upside down, to how our team has responded, looking after each other and our communities, keeping our operations running and our customers served, in our Annual Report 2021.
It’s been a year like no other and the way our people have responded, and what they have achieved, has been nothing short of inspirational. Our results this year show a strong, agile and resilient business, with a purpose that permeates across the organisation and a strategy that is delivering consistent growth.
Given the huge personal and professional challenges of the Covid-19 pandemic, with our office-based colleagues working from home and smaller crews operating our plants, I can honestly say I haven’t seen anything more remarkable in over 30 years of working in business. I am both humbled by and proud of what the team has achieved this year – and more confident than ever in the future of Tate & Lyle.
Being in the food industry, we are an essential business in the countries we operate in, and during the pandemic, all our manufacturing facilities have remained operational. Demand closely correlated to the imposition and easing of lockdowns in our largest markets of North America and Europe.
At the start of the year, in April and May, with lockdowns in place in both regions, we saw a significant reduction in demand for our ingredients used in products for out-of-home consumption, partially offset by stronger in-home consumption. From June onwards, demand improved as lockdowns eased, although as we finished the year, out-of-home demand remained below pre-pandemic levels. In the higher growth markets of Asia and Latin America, demand improved in China from the second quarter of the financial year as it emerged from lockdown, while in Latin America demand slowed as lockdowns were imposed.
Despite all these challenges, Primary Products increased adjusted operating profit by 5%, helped by a record year of Commodities profits; and Food & Beverage Solutions delivered another year of strong performance with revenue up 6% and adjusted operating profit 12% higher.
Overall, Group adjusted profit before tax was up 6%, and adjusted diluted earnings per share were 12% higher, benefiting from a lower effective tax rate. What these results show is the continuing strength of our strategy, and the importance of our ‘Sharpen, Accelerate, Simplify’ priorities in supporting performance (read more about these on page 16 in our Annual Report 2021).
I’d like to highlight two areas in particular: first, a tremendous effort from our Global Operations team, whose focus on efficiency delivered another US$37 million in productivity benefits. This means we have delivered US$124 million towards our target of achieving productivity benefits of US$150 million over the six years to March 2024. And second, we continued to make progress on our strategy. I’m delighted that we succeeded in completing two important strategic acquisitions, funded by the free cash flow generated in the year, and that New Products grew by an impressive 21% to £133 million. We also finished the year in a more robust financial position and with a stronger balance sheet.
Despite all the challenges of the global pandemic, in my view, we achieved more this year than in any of my seven years at Tate & Lyle.
Purpose: Our north star in a turbulent year
At the start of the year, we set out four clear priorities: to look after our colleagues and communities; strengthen our relationships with customers; continue to progress our strategy; and maintain our financial strength. In determining these priorities, we were guided by our purpose of Improving Lives for Generations, which has been our north star in how to handle an uncertain and constantly changing environment.
When the pandemic hit, we said our decisions must be led by the science and the data. And with the data being different in every location, this meant putting the safety of our people in the hands of those on the ground – our local leadership – guided by principles set by our global pandemic response team.
During the year we’ve had only three small outbreaks of Covid-19 infection at our sites, with just a handful of people involved, all of whom recovered well. But safety is about more than just not catching the virus – it’s about people’s wellbeing, and that was hugely challenged by the pressures of lockdown and people’s individual personal circumstances.
People’s mental health and wellbeing has been very high on our agenda all year. People saw that we meant what we said – safety was our priority, and that we would support our people in whatever way they needed. Throughout the year, as a leadership team, we made sure we communicated clearly with our people and stayed as visible as possible.
This year I did something I’ve never done before: I got the opportunity to talk to every single employee in the Company via our so called ‘Virtual Cafes’. And the format of virtual cafés was more conducive to people being open and honest with each other at every level – no doubt helped by the personal aspect of seeing inside each other’s homes, meeting families and pets too. I know I speak for the whole leadership team in saying that I feel I understand our people and their challenges far better now than I did before the pandemic.
Keeping connected with our customers
Our focus on serving our customers was a thread that ran through everything we did this year. We were inspired by knowing that we were keeping the all-important food supply chain going, whether that was making food and beverage ingredients or, for our industrial starches, meeting the increased demand for packaging materials as people shopped online. I think we surprised even ourselves with just how ambitious and agile we could be, and nowhere was this more evident than the creative ways we kept connected with our customers.
These included our technical people using video technology to see inside our customers’ operations to help optimise their production. Or our logistics team finding ways to accommodate rapidly fluctuating demand for products by rethinking delivery systems and schedules. Or holding virtual tasting sessions for customers with prototypes being prepared and sent out in advance.
By having an absolute focus on serving our customers at their time of need, by introducing new and innovative ways of working, and by thinking creatively, we have strengthened our relationships with our customers this year.
Bright future in an uncertain world
Tate & Lyle has had a strong year, weathering the pandemic and finishing the year in a more robust financial position than when we started. There is much that we still don’t know about what that world will look like, but we do know the pandemic has heightened people’s awareness of the importance of a healthier diet and lifestyle.
Our high-quality portfolio and technical capabilities in sweetening, mouthfeel and fortification which help reduce sugar, calories and fat, and add fibre to food and drink, mean we are well-positioned to meet this growing trend. Covid-19 has also accelerated our own journey towards being a more agile, ambitious and compassionate company with more contemporary ways of working. We must strive to maintain these positive attributes as the world opens up.
Our people have shown this year how a powerful purpose can inspire them to do extraordinary things and, through their hard work, we are emerging stronger from the pandemic. I am more confident than ever in the long-term growth potential of Tate & Lyle.
Read Nick’s full review from page 14 of the Annual Report 2021, here.
Find out what else we’ve been up to over the past year in our Annual Report 2021 hub
Download a copy of the Annual Report 2021 below