Results for the year ended 31 March 2024
Strong profit and cash performance
Sale of remaining interest in Primient completes transformation to speciality business
Sale proceeds to be returned to shareholders through share buyback programme
| Adjusted performance1 | Statutory performance | ||||
| 2024 | vs 2023 | 2024 | vs 2023 | ||
| Revenue | £1 647m | (2)% | Revenue | £1 647m | (6)% |
| Food & Beverage Solutions | £1 359m | (2)% | Food & Beverage Solutions | £1 359m | (5)% |
| Sucralose | £174m | (1)% | Sucralose | £174m | (6)% |
| EBITDA2 | £328m | 7% | Primary Products Europe | £114m | (12)% |
| Food & Beverage Solutions2 | £281m | 8% | |||
| Sucralose | £52m | (4)% | |||
| EBITDA margin | 19.9% | 170bps | |||
| Share of profit of Primient | £35m | 53% | |||
| Profit before tax2 | £287m | 18% | Operating profit | £207m | 6% |
| Earnings per share2 (EPS) | 55.5p | 18% | Profit before tax | £226m | 48% |
| Free cash flow2 | £170m | £49m | Diluted earnings per share | 46.5p | 1% |
Key highlights
· Strong financial performance, successfully navigating challenging markets
− Adjusted EBITDA growth +7%, adjusted EBITDA margin +170bps
− Excellent cash generation with cash conversion 23ppts higher at 85%, well ahead of target
− Strong productivity performance leads to increase in 5-year savings target to US$150m
· Primient sale completes transformation to speciality food and beverage solutions business
− Agreed sale of remaining interest in Primient for US$350m in cash
− Intention to return net cash proceeds from Primient sale to shareholders via share buyback programme
· Continue to progress growth-focused strategy and invest for long-term
− Solutions-based business increasing; solutions revenue from new business wins up 3ppts to 21%
− Continue to invest in innovation and solution selling, technology and new capacity
· Leading in sustainability, with new, more ambitious climate targets aligned to 1.5oC trajectory
− New science-based GHG emissions targets to 2028 deliver larger, faster emissions reductions
Financial headlines
· Revenue (2)% due to lower volume from soft consumer demand, customer destocking and prioritising margin
· Adjusted EBITDA2 up 7%, benefiting from proactive mix management, productivity savings and cost discipline
· Strong productivity performance with savings of US$41m delivered in first year of five-year ambition
· Adjusted profit before tax up 18%, from FBS3 growth, increased Primient share of profit, lower finance charges
· Free cash flow1 of £170m, £49m higher driven by strong cash conversion from working capital discipline
· Organic return on capital employed1 improved by 40bps; on reported basis decreased 20bps to 17.4%
· Recommending final dividend of 12.9p per share: full-year dividend of 19.1p per share +3.2%
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1. Revenue growth, adjusted EBITDA and adjusted EBITDA margin, share of adjusted profit of Primient, adjusted earnings per share, free cash flow, return on capital employed (ROCE), net debt and net debt to EBITDA are non-GAAP measures (see pages 11 to 14). Changes in adjusted performance metrics are in constant currency and for continuing operations. Organic ROCE excludes the impact of acquisitions.
2. Comparative restated to exclude other M&A costs of £(2) million reflecting the revised definition of adjusted EBITDA, see page 33.
3. FBS is Food & Beverage Solutions
Nick Hampton, Chief Executive said:
“In challenging market conditions, it’s been another year of robust financial performance and strategic progress, with strong profit growth and productivity delivery, excellent cash generation, and further progress to transform the business.
The actions taken over the last six years have created a higher quality and more resilient business, with the agility to navigate the challenging economic environment and softer consumer demand we saw last year. While managing these short-term market dynamics, we also continued to set up the business for long-term growth by increasing investment in technology, innovation, solution selling and new capacity, and by intentionally moving away from low margin business. I am particularly pleased by our progress building our solutions business with customers, a core element of our strategy, with solutions new business wins continuing to grow.
The separate announcement we made today of the sale of our remaining stake in Primient represents an important milestone for our business. With this sale, the transformation of Tate & Lyle into a fully-focused speciality food and beverage solutions business is complete. We are now well-positioned to capture the significant growth opportunities ahead as we look to provide our customers with the solutions they need to meet growing consumer demand for healthier, tastier and more sustainable food and drink.
Our robust balance sheet, strong cash generation and the proceeds from the sale of Primient underpin our confidence to enhance shareholder returns through the share buyback programme, whilst retaining the flexibility to pursue both organic and inorganic growth opportunities. We are excited by Tate & Lyle’s future.”
Outlook
We have navigated the unprecedented cycle of inflation and volatile consumer demand well, delivering a compound average growth rate of revenue of 11% and adjusted EBITDA of 10% for the three years ended 31 March 2024.
Over the last year, we prioritised revenue and margin, ahead of volume growth. Looking ahead, we expect to grow from this new base and, with the end of customer destocking and consumer confidence gradually improving, we expect good volume growth in the 2025 financial year, accelerating as the year progresses.
Following a period of exceptional input cost inflation, we are now seeing input cost deflation and, as a result, revenue was lower in the second half of the 2024 financial year reflecting the pass through of lower costs. This is expected to continue in the first half of the 2025 financial year.
Therefore, for the year ending 31 March 2025, we expect to deliver in constant currency:
· Revenue slightly lower than the prior year
· EBITDA growth of between 4% and 7%.
Following completion of the sale of Primient, we will no longer consolidate its profits.
Sale of Primient and share buyback programme
Sale of remaining interest in Primient
Over the last six years, Tate & Lyle has been executing a major strategic transformation to become a growth-focused speciality food and beverage solutions business. This transformation has included a much sharper focus on customers and categories, increased investments in innovation and solution selling capabilities, and significantly strengthening our sweetening, mouthfeel and fortification platforms through new product development and acquisitions.
A critical step in this transformation journey was the sale, in April 2022, of a controlling interest in Primient, our primary products business in North America and Latin America to KPS Capital Partners, LP (KPS).
Today, we separately announced that we have reached an agreement to sell our remaining 49.7% interest in Primient to KPS. Under the agreement, Tate & Lyle will receive US$350 million (c.£279 million). These proceeds will be payable in cash at completion which is anticipated by the end of July 2024. The transaction values Tate & Lyle’s 49.7% stake in Primient at 6.5x EV/EBITDA, ahead of the valuation of Primient on the sale of the initial controlling stake, completed on 1 April 2022.
The sale completes the staged exit from Primient well ahead of expiry of the original lock-up period of eight years which lasts until 1 April 2030. The robust long-term agreements between Tate & Lyle and Primient put in place in April 2022 to ensure supply security, with a remaining life of around 18 years, will continue to operate. Net cash proceeds, after tax, are expected to be around US$270 million (c.£215 million).
Total cash proceeds from the full exit of Primient including dividends received since the sale of the initial holding in April 2022 exceeds US$1.5 billion.
Share buyback programme and capital allocation
Consistent with the Board’s capital allocation policy, the Board intends to return the net cash proceeds received from the Primient sale to shareholders by way of an on-market share buyback programme. The buyback is expected to commence on completion of the Primient sale and further details will be announced in due course.
The Board’s priority is to continue its disciplined deployment of capital and to maintain Tate & Lyle’s financial strength. Looking forward, we will look to retain the flexibility in the balance sheet to drive value accretive organic and inorganic growth, with long-term efficient leverage sitting in the range of 1.0x to 2.5x net debt to EBITDA.
Fully-focused speciality food and beverage solutions business
Following the sale of Primient, Tate & Lyle is a fully-focused, speciality food and beverage solutions business with a clear strategic focus and strong sense of purpose.
· Global leader in sweetening, mouthfeel and fortification, creating solutions for our customers to meet growing consumer trends for healthier food and drink.
· Science-driven business, with an established record of innovation and scientific expertise.
· Well-balanced and global business with a strong presence in developed markets and a platform for accelerated growth in the large markets of Asia, Middle East, Africa and Latin America.
· Strong balance sheet providing flexibility to invest for growth, and an experienced management team with a track record of delivery.
Over the last six years, Tate & Lyle has been re-positioned to be at the centre of the future of food, operating in segments of the market which are seeing significant growth. This supports our five-year financial ambition to 31 March 2028, to deliver:
· Revenue growth of 4% to 6% each year (2024: (2)% lower)
· Adjusted EBITDA growth of 7% to 9% each year (2024: 7% growth)
· Improved organic return on capital employed by up to 50bps on average each year (2024: 40 bps improvement)
· US$100m of productivity savings (2024: US$41 million savings and ambition increased to US$150m).
As stated at our Capital Markets Event on 8 February 2023, revenue growth is on an underlying basis excluding the impact of abnormal inflation and deflation. We also have the potential to further accelerate growth through partnerships and M&A.
Delivering our strategy
We continued to invest in progressing our strategy in line with our commitment to ‘Science, Solutions, Society’.
Science
· Investment in innovation and solution selling was 5% higher, with investments in new customer-facing labs, new technology and strengthening capabilities in areas such as sensory and open innovation.
· New Product revenue was up 13% on a like-for-like basis (i.e. no products are removed from disclosure due to age) with strong growth in the mouthfeel platform; revenue was modestly lower on a reported basis.
· We launched 9 New Products into the market including TASTEVA® SOL Stevia Sweetener, a patent-protected breakthrough in stevia technology to help customers solve stevia solubility challenges.
· New automated lab established at our Customer Innovation and Collaboration Centre in Singapore with advanced technology to accelerate the development of mouthfeel solutions and increase our customers’ speed-to-market.
· We added 61 patents to our patent portfolio and now have over 540 patents granted and over 220 pending.
Solutions
· The value of solutions-based new business wins increased by 3ppts to 21% of revenue, with strong solutions performance in Asia, Middle East, Africa and Latin America.
· Innovation is a key driver of our solutions offering. 44% of revenue from our new business pipeline involved the formulation of one or more New Products.
· We opened a new Customer Innovation and Collaboration Centre in Jakarta, Indonesia, bringing our global network of Centres to seventeen.
· We invested €25 million to add new capacity for non-GMO PROMITOR® Soluble Fibres in Boleráz, Slovakia. Production came on-line in May 2024.
Society
· We significantly advanced our sustainability agenda:
− In the 2023 calendar year, from a 2019 base, our Scope 1 and 2 absolute greenhouse gas (GHG) emissions were 11% lower (2030 target: 30% reduction), and our Scope 3 absolute GHG emissions were 20% lower, exceeding our target of a 15% reduction by 2030 seven years ahead of schedule.
− In May 2024, we announced new targets to accelerate the reduction of our Scope 1 and 2 and Scope 3 GHG emissions. Our new targets to 2028, from a 2019 base, replace our existing 2030 targets and have been validated as science-based on a 1.5oC trajectory by the Science Based Targets initiative.
− Our facility in Guarani, Brazil became our first site to be 100% powered by renewable energy, and our facilities in the Netherlands, UK and Italy are buying 100% of their electricity from renewable sources.
− We continued to support sustainable acres of corn equivalent to 100% of the corn we buy each year (367,000 acres in 2023), and to support intervention programmes with farmers in the US, for example to manage nitrogen levels in the soil to increase crop yields, improve soil health and minimise the impact on local watersheds.
− 90% of our waste was beneficially used mainly either as nutrients on local farms or for energy recovery.
· 45% of leadership and management roles (~500 positions) are held by women.
· Since 31 March 2020, our low- and no-calorie sweeteners and our fibres have removed 7.9 million tonnes of sugar from people’s diets, equivalent to more than 31 trillion calories.
Group performance
| Revenue | Adjusted EBITDA | |||
| Full-year | Change1 | Full-year | Change1 | |
| £1 647m | (2)% | £328 | 7% | |
1 Growth in constant currency.
Overview
The Group delivered strong adjusted EBITDA growth. Revenue was 2% lower reflecting lower volume partially offset by good mix management and the recovery of inflation. Adjusted EBITDA was 7% higher with adjusted profit before tax 18% higher.
Food & Beverage Solutions performed well with revenue slightly lower and adjusted EBITDA 8% higher. The underlying performance of the Sucralose business remained steady, with adjusted EBITDA 4% lower. The optimisation of Primary Products Europe is continuing with losses significantly reduced.
Our focus in Food & Beverage Solutions was to prioritise revenue and margin, ahead of volume growth. This intentional re-positioning, together with softer consumer demand and customer de-stocking, combined to deliver lower volume. Revenue was 2% lower, reflecting the benefit of mix management and the recovery of net input cost inflation. A key driver of our growth-focused approach is our investment in innovation and solution selling. We made further progress in the year, with revenue from New Products up 13% on a like-for-like basis, and solutions as a percentage of our new business wins by value increasing by 3ppts to 21%.
For Primient, the adjusted share of joint venture profit was £35 million, 53% higher. Operating performance improved, supported by robust demand for sweetener products, strong customer contracting in 2023 and 2024 and improved operational performance, while increased interest rates drove finance charges higher. Tate & Lyle received US$74 million in cash dividends from Primient in the year.
Cash generation
Free cash flow was £49 million higher at £170 million, with an improvement in working capital of £112 million, benefiting from increased discipline in inventory management. While driving greater cash generation, we also continued to invest in long-term growth with capital expenditure increasing by £39 million to £110 million to deliver capacity expansions for Food & Beverage Solutions.
Our ambition is to increase the conversion of profit into cash to 75% in the five years to 31 March 2028. During the 2024 financial year, we exceeded that target delivering cash conversion of 85%, 23ppts higher. Cash generation remains a priority, and our focus now is to consistently exceed cash conversion of 75%. Net debt was £153 million, £85 million lower, with net debt to EBITDA at 0.5x, and liquidity of over £1.1 billion.
Productivity
We have made an excellent start on our five-year ambition to deliver US$100 million of productivity savings by 31 March 2028. Productivity savings in the year were US$41 million, well ahead of our target at the start of the year of US$25 million savings. These savings came from areas such as operational efficiencies, supply chain and other cost savings. Given this strong progress, we have increased our productivity target and now expect to deliver savings of US$150 million by 31 March 2028.