Buoyant first half for Tate & Lyle
Global ingredients supplier Tate & Lyle has seen a strong first half, boosting its expectations for its full-year results.
Adjusted profits before tax for the group rose 37% (or 22% in constant currency) from £103m to £140m for the six months to 30 September 2016. Group sales rose 13% in the period from £1.1bn to £1.3bn, or 1% on a constant currency basis.
The firm also saw a 12% increase in adjusted operating profit for its Speciality Food Ingredients division to £94m, with good growth in its core business and a £15m increase in adjusted operating profit for Sucralose, supported by a one-off inventory sell-down. However, it reported a £6m decrease in Food Systems driven by lower volumes in Europe.
Speciality Food Ingredients (excluding Sucralose and Food Systems) had a particularly strong performance in Europe, the Middle East and Africa, with sales up 36%, driven by increased sweetener volume from the 100% acquisition of a facility in Slovakia. This compared to a rise in sales of 7% in North America and 15% in Asia-Pacific and Latin America.
Splenda Sucralose sales rose 9% from £77m in the same period in 2015 to £84m for the first six months of 2016. The company explained: “We carried a higher than normal Splenda Sucralose inventory into the period as we transitioned to a single manufacturing facility at McIntosh. This transition reached planned production levels earlier than expected and allowed us to reduce in inventory in the period. The one-off sell-down of this excess inventory more than offset the expected double-digit decline resulting from the reduced manufacturing capacity.”
The volume of new products grew by 28%, with growth seen across the three platforms – sweeteners, texturants and health & wellness. Sales increased by 18% to £37m. The company said: “Delivering innovative new products and solutions which meet customers’ and consumers’ needs in areas such as sugar and calorie reduction, ‘clean-label’ texturants and fibre enrichment is a key enabler of growth. For example, we continued to develop our sweeteners range with Multivantage Syrup, a low-sugar, low-viscosity sweetener, and extended our range of clean-label texturants with the launch of Claria Delight, a line of tapioca-based functional clean-label starches.”
Bulk Ingredients recorded a volume rise of 2% in the period with a 36% rise in adjusted operating profit to £64m in the period.
Adjusted diluted earnings per share rose 19% in constant currency from 18.1p to 24.3p.
Tate & Lyle chief executive Javed Ahmed said: “We have made a strong start to the year, delivering good profit growth in both divisions, supported by good US bulk sweetener demand in the key summer beverage season, and the benefit of the one-off sell-down of excess inventory in Sucralose. We continued to strengthen execution across the business, leading to further improvement in customer service and supply chain performance.
“Speciality Food Ingredients performed well… delivering double-digit profit growth in the core business. All regions delivered solid volume performance other than North America where volume was held back by lower demand. Sales from new products continued to gain good traction and bulk ingredients performed particularly well, driven by solid demand, robust margins and strong manufacturing performance.
He added he expected adjusted profit before tax in constant currency for the full year to be higher than anticipated coming into the year drive by the strong first-half performance, with performance in the second half remaining in line with expectations.
The company said it had assessed the impact of the EU referendum in the UK on its business, adding; “The group generates less than 2% of its revenues in the UK, with most being US-dollar based. The outcome of this referendum is not expected to have a material near-term impact on our business and we are well-placed to grow our global business without significant disruption.”
In September Tate & Lyle expanded capacity at its oats ingredients manufacturing facility in Kimstad, Sweden.
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