tereos group 2017-18 annual results - investors - …...• a natural sweetener from wheat • a...

TEREOS GROUP

2017/18 RESULTS & PROSPECTS

June 12th, 2018

2

Resilient 2017/18 results thanks to a recordperformance

A record performance…

z • 25% drop in world sugar prices

• Record turnover at €5 billion

• Stable EBITDA at €594 Mvs €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

5.3MT

+ 26%

+ €40 Mvs target

TEREOS 2017/18 ANNUAL RESULTS

€140 M

PERFORMANCE PLAN 2015/18

MARKETS IN PROFOUND MUTATION

1

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

4

World raw sugar price (NY11) (2008 � 2018)


0

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

Liberalization structurally changed the European sugar market

5

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


• Prices reached a historic low in Europe

• Down 25% over a year and 40% since the announcement

of 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

Despite this unfavorable environment, Tereosincreased 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 TereosCommodities…

• … supported by new logistics infrastructure in France

…driven by


4 201

4 8194 987

2015/16 2016/17 2017/18

+19%

In Europe, market liberalization is changing the old 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, 2 nd largest in wheat protein worldwide

� Tereos, one of the leaders in organic sugar in Europe


France

Italy, SE Europe

UK & Ireland Germany, NE Europe

Iberia Benelux, Nordics

New consumer expectations

8

HEALTH & NUTRITION

E-COMMERCE SUSTAINABILITYSIMPLICITY & VALUE


Sweet&You : our new nutritional reformulation solutions

9

A NEW NUTRITIONAL REFORMULATION SERVICE

WITH NATURAL SWEETENING PRODUCTS


Launch of EU’s 1 st 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 our Aalst (Belgium) plant

• Used in beverages , fruit preparation , ice creams and cakes


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 andMozambique


E-Commerce solution launched in Brazil

12TEREOS 2017/18 ANNUAL RESULTS

OBJECTIVES

REACH SMALLretail customers

HOW ?Omnichannel platform

PILOTCustomer Behaviour

1

2

3

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 SUGARFACTORIES VS. 2010

FOR THE SUGARCANE FACTORIES

2020 TARGETS


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


A slightly growing worldwide sugar demand

+1.8% on average

Escaudoeuvres (France): opening of new export logist ics unit

15

New logistics facilities dedicated to export


16

Two new commercial offices: Vietnam and South Africa

Commercial offices

Industrial sites


Kenya

Tanzania

Mozambique

South Africa

Reunion Island

Brazil

India

Singapore

China

Vietnam

Indonesia

ASIA

LATIN AMERICA

EUROPE

AFRICAINDIAN OCEAN

17

Thanks to its exports Tereos accompanies growth in emerging countries


2016/17 1 Mt

2017/181.4 Mt

Set-up of Tereos Commodities in 2014

+ 100 countries

Tereos sells

today

its products

in more than

100 countries

1.4 Mt

of sugar sold

• 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


Turkey

Israël IndiaMyanmar

Vietnam

Philippines

Dongguan

Tieling

Indonesia

South Africa

TereosSingapore

Australia

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

PROTEINS IN 18 COUNTRIES

TEREOS AN AGRICULTURAL AND INDUSTRIAL EXPERTISE

2

Tereos Sugar France: Record 1st post-quota campaign


Average production per sugar plant

+45%

2016 : 190 kt

2017 : 275 kt

0

500000

1000000

1500000

2000000

2500000

3000000

+900 kt

+800 kt

BÉGHIN SAY ACQUISITION

END OF QUOTAS

TEREOS SUGAR PRODUCTION

2000 to 2017 (kt)

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(%)


11,511,2

10,8 10,7

10,2 10,1

9,6 9,5

8,8

8,1

87,788,2

88,9

90,5

World’s 2 nd largest sugar producer in 2018

22

Source: FO Licht, May 28, 2018


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

0 1000 2000 3000 4000 5000 6000 7000

Cristal Union

Wilmar

COFCO

Thai Roong Ruang

Nordzucker

AB Sugar

Raizen

Mitr Phol

Tereos

Südzucker

23

Starch activities production up 11%

STEADY GROWTH IN ASIA…


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

� China - Tieling: +48% starch volume vs 2016/17product portfolio development

� China – Dongguan: +73% grind volume vs 2016/17product 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

24

Tereos is strengthening its competitiveness

€140 M of operational gains

i.e. + €40 Mvs. initial target

PERFORMANCE PLAN2015/18


FINANCIALS

3


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 16/17March

FY 17/18 March

+3%

-2%

As reported

Net result excluding price complements

Net result excluding price complements andexceptionals: +€54 M

TEREOS 2017/18 ANNUAL RESULTS 26

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 0 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


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


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


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 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


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


Group Cash flow


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

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


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 of 3.3x


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

255166

331

182

629

6 4 2

140

498

598

0

100

200

300

400

500

600

700

800

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

illi

on

s

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


Group rating BB/Stable

RatingBond 2020 BB

BB/Stable

BB

RatingBond 2023 BB BB

Group ratings


PROSPECTS

4


Our strategic goals

ADAPT TO NEW MARKET TRENDS

BE COMPETITIVE

REDUCEVOLATILIY


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


BE COMPETITIVE IN A GLOBAL MARKET

Our new performance Plan: Ambitions 2022


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


42

Creation of two new business service centers in France and Brazil


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

AsiaChina: 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

BrazilPopulation : 207 m

Sugar production : 39 mt

1st world exporter

AfricaPopulation : 1 216 m

Sugar consumption : 22 mt

ADAPT TO NEW MARKET TRENDS


Tereos announces the opening in Singapore of its 3rd application lab

44

Contribute to the development of new

products through evaluation and validation of 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 labin Moussy, France


Diversification, providing balance in cyclical markets


Revenue breakdown by product (M€)

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

of our French sugar businesses in 2019

Others (incl. energy

Animal nutrition

6%Starches

5%

Alcohol / Ethanol

Other sweeteningproducts

Sugar

7%Proteins

10%

15%

46%

11%

€5.0bn

46

Seizing opportunities offered by developing countries

75% of our sales outside France, >30% outside Europ e

FRANCE

26%

13%AMERICA

8%AFRICA

10%ASIA /

MIDDLE EAST

43%EUROPE

(EXCL. FRANCE)

SPLIT OF TEREOS REVENUES BY COUNTRY OF DELIVERY


CLOSING REMARKS

In a changing environment , Tereos continues its transformation

48

REDUCEVOLATILITY

BECOMPETITIVE

ADAPT TONEW MARKET TRENDS

A STRATEGY DESIGNED TO RESPOND TO MARKETS MUTATIONS

TEREOS IS WELL POSITIONED TO SEIZE OPPORTUNITIES

IN A CHANGING WORLD

AN AMBITIOUS STRATEGYOPENING OF TEREOS CAPITAL : STUDY LAUNCHED


APPENDICES

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 0 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


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

51

DISTRIBUTION TO COOPERATIVES(in M€)


1526

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

tereos group 2017-18 annual results - investors - …...• a natural sweetener from wheat • a...

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