Tate & Lyle remained stable in its third quarter. It reported increased trading volumes in some divisions, but lower margins and continuing difficulties in the ethanol market.
In the three months to 31 December, the company described trading in its specialty food ingredients division as “steady”, with volumes ahead of the same period a year earlier.
In the food systems division, Tate & Lyle's board said volume continued to grow in the quarter, benefiting from the acquisition of Gemacom in December 2014. Margins in that business declined, however, as a result of a sharp increase in the cost of some ingredients.
It said: "Splenda sucralose volume was ahead of the comparative period although, as expected, pricing was lower year-on-year.”
In the supplier’s bulk ingredients division, sweetener volumes in North America were slightly ahead of those recorded at the same point last year.
The company's commodities division was still having a negative impact on overall performance, especially with continued weakness in the US ethanol market.
Tate & Lyle's outlook for the year remained unchanged: "As previously communicated, the group's adjusted profit before tax from continuing operations in constant currency and on an equity-accounting basis is expected to be broadly in line with that of the 2015 financial year, at £193m.”
It added: "At reported rates, adjusted profit before tax is expected to be modestly below this figure.”
Looking forwards, Tate & Lyle's board remained confident. It was expecting the specialty food ingredients division to grow slowly, with a long-term objective to grow ahead of the market and drive margin expansion.
It said: "While in the near-term we expect weakness in commodity markets to persist, we will continue to target stable earnings from core bulk ingredients and to manage commodities to dampen volatility.”
The company said that is in the process of overhauling its business to focus on higher-margin speciality food ingredients instead of commoditised bulk ingredients, which account for a majority of the group's sales.
In the company’s half year results, adjusted profit before tax increased by 28% to £103m. This morning, shares in Tate & Lyle fell 7.7%.