HEADLINES
- Strong first half performance with Group revenue +20% and adjusted operating profit +29%
- Good progress delivering growth strategy as newly focused speciality food and beverage solutions business:
- Food & Beverage Solutions revenue +21% including inflation price-through and mix management
- New Products revenue +19% benefiting from focus on innovation and customer collaboration
- Integration of Quantum Hi-Tech acquisition, a leading dietary fibre business in China, progressing well
- Managing impact of cost inflation through strategic mix management, pricing, productivity and cost discipline
- Adjusted profit before tax1 +10% with strong Tate & Lyle and significantly lower Primient joint venture profits
- Strong balance sheet and cash delivery underpins investment for growth and progressive dividend policy
- Outlook for year to 31 March 2023 – adjusted profit before tax to be in-line with current market expectations
FINANCIAL SUMMARY
NICK HAMPTON, CHIEF EXECUTIVE SAID:
“Our strong first-half represents an excellent start to Tate & Lyle’s first full year as a growth-focused, science-driven, speciality food and beverage solutions business. Food & Beverage Solutions delivered another half of strong revenue and profit performance with broad-based growth across all regions. We continued to see robust customer demand for solutions which make healthier food and drink, and to benefit from our increasing focus on innovation and close customer collaboration.
We have seen significant inflation and supply chain volatility in raw materials, energy and logistics costs, especially in Europe. We have worked closely with our customers to provide visibility of increasing input costs and continue to follow this approach as we enter discussions for 2023 calendar year contract renewals.
The separation of the Primient joint venture was executed successfully in April to the great credit of both the Tate & Lyle and Primient teams. While Primient had a difficult first half due to inflation and operational challenges, underlying demand remains robust and with a focus on cash generation we have received US$76m in cash dividends this year.
The strategic re-positioning of Tate & Lyle to focus on speciality food and beverage solutions has significantly enhanced the quality and resilience of our business. Despite the uncertain economic outlook, we remain confident that the strength of our ingredient portfolio across attractive categories and regions, our focus on serving our customers, and the expertise and commitment of our people will enable us to successfully deliver our growth-focused strategy.”
1 Comparatives for adjusted results for the six months to 30 September 2021 are pro-forma financial information published on pages 44 and 45 of the half year results statement for that period issued on 4 November 2021. Free cash flow comparative is continuing operations only.
2 The adjusted results for the six months to 30 September 2022 exclude exceptional items, amortisation of acquired intangible assets and other fair value adjustments, the tax on those adjustments and tax items that are themselves exceptional. A reconciliation of statutory and adjusted information is included in Note 2 to the Financial Information. Growth percentages are calculated on unrounded numbers. Changes in adjusted performance metrics are in constant currency throughout this statement.
3 Pro-forma adjusted diluted EPS has been calculated based on the earnings for the period and the shares in issue adjusted for impact of the 6 for 7 share consolidation as if it occurred on 1 April 2021.
4 Statutory results are continuing operations only
KEY HIGHLIGHTS1
Food & Beverage Solutions: continued strong revenue momentum
- Underlying volume +2% from robust customer demand; reported volume (8%) lower reflecting the planned transition of Primary Products Europe capacity, supply chain challenges and one-off factors
- Revenue +21% with double-digit organic growth across all regions
- Volume excluding Primary Products Europe (5%) lower delivering +21% revenue growth from 13ppts inflation price-through, 12ppts strategic mix management and 1ppt acquisitions
- Adjusted operating profit +26% at £113m
Continued focus on innovation and customer collaboration driving New Products revenue growth
- New Products revenue +19%2 reflecting good demand for fortification and mouthfeel solutions
- New Products represent 15% of Food & Beverage Solutions revenue
Sucralose delivers steady earnings
- Volume +9% due to strong customer demand, a phasing benefit and modest optimisation of production
- Revenue +12% with higher volume and benefits from customer mix
- Adjusted operating profit 8% higher at £39m
Group results reflect strong Tate & Lyle profits and significantly lower profits in Primient joint venture
- Revenue +20%; adjusted operating margin +110bps in constant currency; adjusted profit before tax +10%
- Share of adjusted profit of Primient joint venture 62% lower1 due to inflation and operational challenges
- Primient executed in-year supplementary pricing where possible with the ability to further price-through inflation during the 2023 calendar year bulk sweetener contracting round
- Received US$76m in cash dividends from Primient, the full amount expected for the 2023 financial year
- Proforma adjusted diluted EPS +9% after adjusted effective tax rate at 21.9%
- Statutory profit after tax on total operations up £19m at £121m from the profit on disposal of Primient offset by the inclusion in the current year of only 49.7% of profits from the retained interest in the joint venture
- Free cash flow of £62m (2021 – £20m) benefiting from higher profits and working capital in-line with the comparative period despite the impact from inflation
- Net debt £345m lower at £281m at 30 September 2022
- Primient net receipts of £1.0bn; acquisition of Quantum £(184)m; special dividend £(497)m
- Net debt to EBITDA ratio 1.0x
- Interim dividend of 5.4p reflects new earnings base, share consolidation and special dividend in May 2022
Continuing to invest in delivering growth-focused strategy
- Strengthened customer-facing solutions capability in areas such as nutrition, sensory and regulatory
- Acquired Nutriati, an ingredient technology business producing chickpea protein and flour
- Opened new Innovation and Customer Collaboration Centre in Santiago, Chile
- Capital projects to deliver growth expansion and ease capacity constraints progressing well
Effective management of significant cost inflation
- £85m of gross cost inflation mitigated by strategic mix management, pricing, productivity and cost discipline
- Quarterly supplemental pricing programme in place since May 2022
- For key production inputs such as corn and energy, forward purchase agreements and hedging are used to help manage input cost volatility and to build supply continuity
Integration of Quantum, a leading dietary fibre business in China, acquired in June progressing well
- Quantum significantly strengthens fortification solutions offering for customers in China and Asia
- Integration on track supported by strong customer relationships and good operating discipline
Good progress on purpose programme and building a more agile and inclusive culture
- Expanded sustainable agriculture programme for stevia
- Food bank partnership programme increased to support local communities
- 42% of top 500 managers are women
1. Adjusted metrics percentage changes are in constant currency, Comparatives for adjusted results for the six months to 30 September 2021 are pro-forma financial information published on pages 44 and 45 of the half year results statement for that period. Pro-forma adjusted diluted EPS has been calculated based on the earnings for the period and the shares in issue adjusted for impact of the 6 for 7 share consolidation completed on 3 May 2022.
2. Definition of New Products updated to reflect nature of innovation launches see page 47. On previous definition revenue was 16% higher in period.
OUTLOOK
For the year ending 31 March 2023, we continue to expect:
- Revenue growth reflecting current top-line momentum
- To offset input cost inflation through strategic mix management, pricing, productivity and cost discipline
- Adjusted profit before tax to be in line with current market expectations with stronger profits in Food & Beverage Solutions offsetting lower profits from the minority holding in Primient.
For more information contact Tate & Lyle PLC:
Christopher Marsh, VP Investor Relations
Tel: Mobile: +44 (0) 7796 192 688
Nick Hasell, FTI Consulting (Media)
Tel: Mobile: +44 (0) 7825 523 383
