TEREOS GROUP 2017/18 RESULTS & PROSPECTS June 12th, 2018 - - PowerPoint PPT Presentation

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TEREOS GROUP 2017/18 RESULTS & PROSPECTS June 12th, 2018 - - PowerPoint PPT Presentation

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TEREOS GROUP 2017/18 RESULTS & PROSPECTS June 12th, 2018 Resilient 2017/18 results thanks to a record performance driving resilient results in a difficult A record performance environment 2 nd z 25% drop in world sugar

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SLIDE 1

TEREOS GROUP

2017/18 RESULTS & PROSPECTS

June 12th, 2018

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SLIDE 2

2

Resilient 2017/18 results thanks to a record performance

A record performance… z

  • 25% drop in world sugar prices
  • Record turnover at €5 billion
  • Stable EBITDA at €594 M

vs €607 M in 2016/17 and €440 M in 2015/16

  • 75% of Group EBITDA coming from

international & starch activities

  • Net result before distribution : + €24 M
  • Operational cash-flow after maintenance :

+ €220 M vs €128 M in 2016/17 et €151 M in 2015/16

  • Net debt lower by €75 M
  • Net debt/EBITDA ratio stable at 4.0x

…driving resilient results in a difficult environment

2nd

World largest sugar producer

5.3

MT

+ 26% + €40 M

vs target

TEREOS 2017/18 ANNUAL RESULTS

€140 M

PERFORMANCE PLAN 2015/18

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SLIDE 3

MARKETS IN PROFOUND MUTATION 1

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SLIDE 4

A world sugar price close to the lowest point in a decade

4

World raw sugar price (NY11) (2008 2018)

TEREOS 2017/18 ANNUAL RESULTS 5 10 15 20 25 30 35 40

YtoY:

  • 25%
  • World sugar prices down

25% over the FY

  • Major increase in sugar

crops in India and Thailand, reaching record levels

  • Growth in Europe white

sugar production (+25%) following end of quotas

  • Short selling by hedge funds

have added to the downward pressure

  • A cyclical market

US$CTS/LB

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SLIDE 5

Liberalization structurally changed the European sugar market

5

European white sugar price (ex-works, €/t, EU Observatory)

TEREOS 2017/18 ANNUAL RESULTS

  • Prices reached a historic low

in Europe

  • Down 25% over a year and

40% since the announcement

  • f the reform
  • Market equilibrium

profoundly changed by deregulation

  • A market in structural

surplus

  • Domestic prices strongly

influenced by world prices

300 350 400 450 500 550 600 650

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SLIDE 6

Despite this unfavorable environment, Tereos increased revenues by some 20% over 2 years

6

Growing turnover…

  • Market share gains in Europe and

Brazil

  • Strengthening of distribution

networks

  • New consumer expectations
  • Market share gains at export
  • Ramp-up of Tereos

Commodities…

  • … supported by new logistics

infrastructure in France

…driven by

TEREOS 2017/18 ANNUAL RESULTS

4 201 4 819 4 987

2015/16 2016/17 2017/18

+19%

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SLIDE 7

In Europe, market liberalization is changing the

  • ld status quo

7

A sugar market share more in line with Tereos natural potential

Share before end of quotas: 11 % Current market share: 14 %

Tereos is innovating to respond to new consumer expectations

Health & Nutrition: new sweetening formulations Plant proteins: Tereos, 2nd largest in wheat protein worldwide Tereos, one of the leaders in organic sugar in Europe

TEREOS 2017/18 ANNUAL RESULTS

France Italy, SE Europe UK & Ireland Germany, NE Europe Iberia Benelux, Nordics

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SLIDE 8

New consumer expectations

8

HEALTH & NUTRITION E-COMMERCE SUSTAINABILITY SIMPLICITY & VALUE

TEREOS 2017/18 ANNUAL RESULTS

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SLIDE 9

Sweet&You : our new nutritional reformulation solutions

9

A NEW NUTRITIONAL REFORMULATION SERVICE WITH NATURAL SWEETENING PRODUCTS

TEREOS 2017/18 ANNUAL RESULTS

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SLIDE 10

Launch of EU’s 1st high fructose content syrup

10

  • A new high fructose content syrup: 95%

fructose

  • A natural sweetener from wheat
  • A high sweetening power allowing to limit

calorie intake

  • Production launch on October 1st, 2017 in
  • ur Aalst (Belgium) plant
  • Used in beverages, fruit preparation, ice

creams and cakes

TEREOS 2017/18 ANNUAL RESULTS

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SLIDE 11

11

Tereos : among the organic sugar leaders

  • A fast growing market:

x6 in 16 years worldwide x2 in 10 years in Europe x7 in 17 years in France

  • Tereos is one of the leaders in organic

sugar distribution in Europe

  • Ongoing development of own complete

product offer in 2019

  • Organic beet sugar in France
  • Organic cane sugar in Brazil and

Mozambique

TEREOS 2017/18 ANNUAL RESULTS

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SLIDE 12

E-Commerce solution launched in Brazil

12 TEREOS 2017/18 ANNUAL RESULTS

OBJECTIVES

REACH SMALL retail customers HOW ? Omnichannel platform PILOT Customer Behaviour

1 2 3

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SLIDE 13

13

Strong commitments to ensure sustainable activities

100%

OF COOPERATIVE GROWERS THAT CARRIED OUT THE SELF- EVALUATION TEST ARE RATED GOLD OR SILVER

  • 15%

ENERGY CONSUMPTION

100%

CARBON NEUTRAL

FOR THE FRENCH SUGAR FACTORIES VS. 2010 FOR THE SUGARCANE FACTORIES

2020 TARGETS

TEREOS 2017/18 ANNUAL RESULTS

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SLIDE 14

Commodities are increasingly driven by emerging markets

14

Growth concentrated in emerging countries

+2.2%

Developed countries will only represent in 2025

24% of world consumption

TEREOS 2017/18 ANNUAL RESULTS

A slightly growing worldwide sugar demand

+1.8% on average

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SLIDE 15

Escaudoeuvres (France): opening of new export logistics unit

15

New logistics facilities dedicated to export

TEREOS 2017/18 ANNUAL RESULTS

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SLIDE 16

16

Two new commercial offices: Vietnam and South Africa

Commercial offices Industrial sites

TEREOS 2017/18 ANNUAL RESULTS

Kenya Tanzania Mozambique South Africa Reunion Island Brazil India Singapore China Vietnam Indonesia ASIA LATIN AMERICA EUROPE AFRICA INDIAN OCEAN

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SLIDE 17

17

Thanks to its exports Tereos accompanies growth in emerging countries

TEREOS 2017/18 ANNUAL RESULTS

2016/17

1 Mt

2017/18

1.4 Mt

Set-up of Tereos Commodities in 2014

+ 100 countries

Tereos sells today its products in more than 100 countries

1.4 Mt

  • f sugar sold
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SLIDE 18
  • Tereos makes up some 20% of world

market

  • 7 facilities in the 2 major production

areas : Europe and China

  • Europe and China account for 80% of

world production

  • A market growing by 10% per year on

average

  • Tereos gained an 11% market share in

Asia thanks to its presence in Singapore and China

2nd largest world player of wheat protein

18 TEREOS 2017/18 ANNUAL RESULTS Turkey Israël India Myanmar Vietnam Philippines Dongguan Tieling Indonesia South Africa Tereos Singapore Australia

SINCE THE OPENING OF ITS COMMERCIAL OFFICE IN SINGAPORE IN 2015, TEREOS EXPORTS WHEAT PROTEINS IN 18 COUNTRIES

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SLIDE 19

TEREOS AN AGRICULTURAL AND INDUSTRIAL EXPERTISE 2

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SLIDE 20

Tereos Sugar France: Record 1st post-quota campaign

20 TEREOS 2017/18 ANNUAL RESULTS

Average production per sugar plant +45%

2016 : 190 kt 2017 : 275 kt

500000 1000000 1500000 2000000 2500000 3000000

+900 kt +800 kt

BÉGHIN SAY ACQUISITION END OF QUOTAS

TEREOS SUGAR PRODUCTION 2000 to 2017 (kt)

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SLIDE 21

Excellent sugar campaign in Brazil

21

Industrial yields improvement z Best agricultural performance among the top players in Brazil

SUGAR PRODUCTION IN BRAZIL (T/HA) TEREOS PLANTS IN BRAZIL (%)

TEREOS 2017/18 ANNUAL RESULTS

11,5 11,2 10,8 10,7 10,2 10,1 9,6 9,5 8,8 8,1 87,7 88,2 88,9 90,5

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SLIDE 22

World’s 2nd largest sugar producer in 2018

22

Source: FO Licht, May 28, 2018

TEREOS 2017/18 ANNUAL RESULTS

SUGAR PRODUCTION (raw sugar equivalent – Mt)

2,200 2,400 2,500 2,600 2,900 3,400 4,300 4,400 5,300 6,250

1000 2000 3000 4000 5000 6000 7000 Cristal Union Wilmar COFCO Thai Roong Ruang Nordzucker AB Sugar Raizen Mitr Phol Tereos Südzucker

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SLIDE 23

23

Starch activities production up 11%

STEADY GROWTH IN ASIA…

TEREOS 2017/18 ANNUAL RESULTS

  • Indonesia:

+36% grind volume vs 2016/17 start of a new maltodextrin line

  • China - Tieling:

+48% starch volume vs 2016/17 product portfolio development

  • China – Dongguan:

+73% grind volume vs 2016/17 product portfolio development

…AND IN FRANCE …IN BRAZIL AND IN ROOTS STARCH

  • Brazil – Corn :

+30% grind capacity vs 2016/17

  • Brazil – Cassava:

+45% own plantation vs 2016/17,

  • France – Potato starch:

+40% volume processed vs 2016/17

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SLIDE 24

24

Tereos is strengthening its competitiveness

€140 M

  • f operational gains

i.e. + €40 M

  • vs. initial target

PERFORMANCE PLAN 2015/18

TEREOS 2017/18 ANNUAL RESULTS

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SLIDE 25

FINANCIALS 3

TEREOS 2017/18 ANNUAL RESULTS

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SLIDE 26

Operating results in line with 2016/17, despite an unfavorable environment

Revenues

€4,987 M

+ 5% vs. LY at constant exchange rate Adjusted EBITDA

€594 M

  • 2% vs. LY at constant

exchange rate 11.9 % margin (-0.7 point)

4 819 4 987

FY 16/17 March FY 17/18 March

Net result excluding price complements

€24 M

607 594

FY 16/17 March FY 17/18 March

107 24

  • 18

FY 16/17 March FY 17/18 March

+3%

  • 2%

As reported Net result excluding price complements

Net result excluding price complements and exceptionals: +€54 M

TEREOS 2017/18 ANNUAL RESULTS 26

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SLIDE 27

Group P&L

  • “Other” includes notably Price complements (-€ 42 M), adjustment in fair value of

biological assets (-€ 38 M) and provision for Europe reorganization (-€ 30 M)

P&L Tereos Group 16/17 17/18 M€

FY FY M€ %

Revenues

4 819 4 987 168 3%

  • Adj. EBITDA

607 594

  • 13
  • 2%
  • Adj. EBITDA Margin

12,6% 11,9%

Seasonality adjustment

5 5 na

Depreciations / amortization

  • 382
  • 385
  • 4

1%

Other

11

  • 111
  • 122

na

EBIT (after price complements)

237 103

  • 134
  • 56%

EBIT Margin

4,9% 2,1%

Financial Result

  • 102
  • 144
  • 42

41%

Corporate income tax

  • 54
  • 18

36

  • 66%

Share of profit of associates

25 41 16 61%

Net Results

107

  • 18
  • 125
  • 117%

var

TEREOS 2017/18 ANNUAL RESULTS 27

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SLIDE 28

Revenues by division

Sugar Europe

  • Increase of sugar volume sold:
  • Production ramp-up (areas, yields and industrial performance)
  • Market share gains in Europe (new unified commercial organization) and strong increase

in exported volume

  • Sharp decrease in sales prices over H2

Sugar International

  • Increase of sugar volume sold: outstanding operating performance in Brazil
  • Fall in world raw sugar prices, but benefits from the hedges secured in advance

Starch & Sweeteners

  • Significant increase of volume sold

Revenues FY 16/17 FY 17/18 M€

Actual Actual M€ %

Sugar Europe 1 861 1 951 91 5% Sugar International 1 317 1 289

  • 28
  • 2%

Starch & Sweeteners 1 498 1 582 85 6% Other (incl. Elim) 144 164 20 14% Tereos Group 4 819 4 987 168 3% var vs FY 17/18

TEREOS 2017/18 ANNUAL RESULTS 28

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SLIDE 29

703 453 440 607 594

15,0% 10,5% 10,5% 12,6% 11,9%

2013/14 Mar 2014/15 Mar 2015/16 Mar 2016/17 Mar 2017/18 Mar

(M€)

Adjusted EBITDA evolution

TEREOS 2017/18 ANNUAL RESULTS 29

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SLIDE 30

Adjusted EBITDA by division

Sugar Europe

  • Benefits from volume increase, but negative impact of fall in world sugar prices over H2

Sugar International

  • Benefits from performance improvements (both agricultural and industrial) + hedges

secured in advance in Brazil enabled to offset the fall in world raw sugar prices Starch & Sweeteners

  • Increased contribution margin over H2 following the new wheat crop in France

Adjusted EBITDA FY 16/17 FY 17/18 M€

Actual Actual M€ %

Sugar Europe 195 179

  • 16
  • 8%

Sugar International 310 311 0% Starch & Sweeteners 94 106 12 13% Other (incl. Elim) 8

  • 2
  • 10

na Tereos Group 607 594

  • 13
  • 2%

var vs FY 17/18

TEREOS 2017/18 ANNUAL RESULTS 30

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SLIDE 31

Investments

  • Investments excl. financial invest.: 59% maintenance, 21% growth, 12% efficiency, 8%

defensive/safety

  • Sugar Europe: ‘Maxi Sugar’ Plan
  • Sugar International: ramp-up of efficiency/expansion investments in Brazil (Cruz Alta

cogeneration and Tanabi expansion)

  • Starch & Sweeteners: support to industrial performance improvement initiatives and

development of product portfolio

Investments FY 16/17 FY 17/18

Actual Actual M€ %

Sugar Europe 115 147 32 28% Sugar International 216 237 22 10% Starch & Sweeteners 82 82

  • 1
  • 1%

Other 2 6 4 238% Total excl. financial invest. 414 472 57 14% Financial investments 224 28

  • 196
  • 88%

Total investments 639 500

  • 139
  • 22%

var vs FY 17/18

TEREOS 2017/18 ANNUAL RESULTS 31

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SLIDE 32

Group Cash flow

TEREOS 2017/18 ANNUAL RESULTS 32

492

  • 42

5

  • 277
  • 195
  • 28

28

  • 68

Cash flow (March 18) Actual Change in working capital Maintenance/ renewal Capex Financial investments Dividends received and disposal of assets CF related to equity Free cash flow (March 18) Actual

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SLIDE 33

Net debt

NB : + debt increase (cash used)

2 425 2 350 42

  • 117

Net debt (March 17) Actual Free cash flow FOREX and other Net debt (March 18) Actual

TEREOS 2017/18 ANNUAL RESULTS 33

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SLIDE 34

Net Debt and leverage

2 212 1 960 2 159 2 079 2 425 2 350 2,8 x 2,8 x 4,5 x 4,7 x 4,0 x 4,0 x

Mar13 (A) Mar14 (A) Mar15 (A) Mar16 (A) Mar17 (A) Mar18 (A) Net debt Leverage

As at March 31, 2018, excluding readily marketable inventories (RMI), the Group’s adjusted net debt totaled € 1,966 M, with an adjusted leverage ratio

  • f 3.3x

TEREOS 2017/18 ANNUAL RESULTS 34

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SLIDE 35

Debt amortization schedule as of March 2018

35

Average tenor: 3.1 years

(*) Total amount of the available undrawn credit lines (< and > 1 y): € 488 M

Debt maturity profile and diversity

255 166 331 182 629 6 4 2 140 498 598

100 200 300 400 500 600 700 800

2018/2019 2019/2020 2020/2021 2021/2022 2022/2023 2023/2024 2024/2025 After € Millions

Mid-term bank facilities Extendible short-term lines Bonds

Cash and cash equivalents as at March 2018 : € 462 M Available committed undrawn credit lines > 1 y : € 319 M (*) Financial security : € 781 M

TEREOS 2017/18 ANNUAL RESULTS

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SLIDE 36

Group rating

BB/Stable

Rating Bond 2020

BB BB/Stable BB

Rating Bond 2023

BB BB

Group ratings

36 TEREOS 2017/18 ANNUAL RESULTS

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SLIDE 37

PROSPECTS 4

TEREOS 2017/18 ANNUAL RESULTS 37

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SLIDE 38

Our strategic goals

ADAPT TO NEW MARKET TRENDS BE COMPETITIVE REDUCE VOLATILIY

38 TEREOS 2017/18 ANNUAL RESULTS

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SLIDE 39

Thanks to performing assets located in some of the most competitive regions

39

Source: Industry data

SUGAR PRODUCTION COST (RAW VALUE) (In US$cts / lb)

10 15 20 25 30 35 2007/08 2009/10 2011/12 2013/14 2015/16 2017/18

India Thaïland France Germany

US$cts/lb

Brazil C/S

TEREOS 2017/18 ANNUAL RESULTS BE COMPETITIVE IN A GLOBAL MARKET

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SLIDE 40

Our new performance Plan: Ambitions 2022

40 TEREOS 2017/18 ANNUAL RESULTS

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SLIDE 41

41

Creation of Campus Europe close to Roissy

Tereos Campus Europe

  • Gathering European operations support functions
  • A European operational center of expertise and innovation
  • 500 employees, previously spread over 9 sites
  • Team installation: between July and December 2018

TEREOS 2017/18 ANNUAL RESULTS

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SLIDE 42

42

Creation of two new business service centers in

France and Brazil

TEREOS 2017/18 ANNUAL RESULTS

Europe

(Lille)

Brazil

(São José do Rio Preto)

  • Service centers dedicated to

supporting our operations in Europe (80 employees) and Brazil (100 employees)

  • Gathering administrative functions
  • Beginning of operations : H2 2018
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SLIDE 43

Asia

China: 1,379 m Sugar deficit: 5.5 mt Indonesia : 261 m of inhabitants and largest world sugar importer

Tereos is well positioned to benefit from growth in emerging markets

43

30% are sales are done in emerging markets

Commercial office

8 industrial sites 1 commercial office 3 industrial sites 3 commercial offices 3 industrial sites 2 commercial offices

Brazil

Population : 207 m Sugar production : 39 mt 1st world exporter

Africa

Population : 1 216 m Sugar consumption : 22 mt

ADAPT TO NEW MARKET TRENDS TEREOS 2017/18 ANNUAL RESULTS

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SLIDE 44

Tereos announces the opening in Singapore

  • f its 3rd application lab

44

Contribute to the development of new products

through evaluation and validation

  • f their performance in relevant

applications

Develop new applications

for our product portfolio in line with new market trends

Collaborate with our customers

through specific customer development projects

Our application labs in the world

2010

Marckolsheim, France

2018

Singapore

2017

Shanghai, China

2019

New lab in Moussy, France

TEREOS 2017/18 ANNUAL RESULTS

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SLIDE 45

Diversification, providing balance in cyclical markets

45 TEREOS 2017/18 ANNUAL RESULTS

Revenue breakdown by product (M€)

Diversification and internationalization : major advantages as the European sugar market will support less the results

  • f our French sugar businesses in 2019

Others (incl. energy Animal nutrition

6%

Starches

5%

Alcohol / Ethanol Other sweetening products Sugar

7%

Proteins

10% 15% 46% 11%

€5.0bn

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SLIDE 46

46

Seizing opportunities offered by developing countries

75% of our sales outside France, >30% outside Europe

FRANCE

26%

13%

AMERICA

8%

AFRICA

10%

ASIA / MIDDLE EAST

43%

EUROPE (EXCL. FRANCE)

SPLIT OF TEREOS REVENUES BY COUNTRY OF DELIVERY

TEREOS 2017/18 ANNUAL RESULTS

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SLIDE 47

CLOSING REMARKS

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SLIDE 48

In a changing environment, Tereos continues its transformation

48

REDUCE VOLATILITY BE COMPETITIVE ADAPT TO NEW MARKET TRENDS

A STRATEGY DESIGNED TO RESPOND TO MARKETS MUTATIONS TEREOS IS WELL POSITIONED TO SEIZE OPPORTUNITIES IN A CHANGING WORLD AN AMBITIOUS STRATEGY OPENING OF TEREOS CAPITAL : STUDY LAUNCHED

TEREOS 2017/18 ANNUAL RESULTS

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SLIDE 49

APPENDICES

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SLIDE 50

Free cash flow

Free Cash Flow - M€ FY 16/17 FY 17/18 var.

Tereos Group

Act. Act.

  • Adj. EBITDA (bef. Price compl.)

607 594

  • 13

Seasonality adjustment 5

5

Cash Flow Hedge 32 53

21

Net financial charges

  • 103
  • 126
  • 23

Income tax paid

  • 29
  • 34
  • 6

Cash Flow 508 492

  • 16

Change in working capital

  • 115

5

120 Cash Flow from operating activities 393 497 104

Maintenance & Renewal

  • 265
  • 277
  • 12

Capex

  • 150
  • 195
  • 45

Financial investments

  • 224
  • 28

196

Disposal of fixed and financial assets 11 5

  • 6

Dividends received 21 23

2 Cash Flow from (used in) investing activities

  • 607
  • 471

135 Cash Flow after investing activities

  • 214

26 240

Dividends paid & price complement

  • 31
  • 76
  • 45

Capital increases/other capital movements 16 8

  • 8

Cash Flow from (used in) transactions relating to equity

  • 15
  • 68
  • 53

Free Cash-Flow

  • 229
  • 42

187

50 TEREOS 2017/18 ANNUAL RESULTS

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SLIDE 51

€63 M€ of dividends and price complements paid to cooperatives

51

DISTRIBUTION TO COOPERATIVES (in M€)

TEREOS 2017/18 ANNUAL RESULTS

15 26 63

2015/16 2016/17 2017/18

2017/18 sugarbeet remuneration including distribution: 28.4 €/t (min. price: 25 €/t)

  • Net results before distribution:

+ €24 M

  • Price complements:
  • € 42 M
  • Net results after distribution:
  • €18 M
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SLIDE 52