Tate & Lyle full-year profits dip, enjoys solid F&B solutions and sucralose performance
The Group says it has delivered “solid financial progress” with Food & Beverage Solutions maintaining momentum
23 May 2019 --- British food ingredients maker Tate & Lyle has reported a 16 percent drop in profits before tax to £240 million (£286 million in 2018). However, the Group says it has delivered “solid financial progress” with Food & Beverage Solutions maintaining momentum and a particularly strong Sucralose performance. The company says earnings per share growth will be broadly flat for 2020.
The full-year results for the year ended March 31, 2019, come as Tate & Lyle eyes expansion opportunities and growth within specialty ingredients and in Asia, as the long-established London-headquartered company evolves ever further from its commodity roots.
Tate & Lyle Chief Executive, Nick HamptonHigher costs weighed down the Primary Products business, (high-volume sweeteners, industrial starches and fermentation products), while top-line momentum continued with solid volume growth in North America and double-digit growth in emerging markets, according to Chief Executive, Nick Hampton.
“Primary Products did well to deliver steady volume in the face of challenging market conditions. Across the business, strong cost discipline helped offset higher than expected input costs and operational execution was excellent, particularly during the extreme cold weather in the US in early 2019,” he says.
He stressed the encouraging progress made over the past year. “The Group delivered solid financial results and we are starting to see real momentum from the three priorities I set out last year to sharpen the focus on our customers, accelerate portfolio development and simplify our business,” notes Hampton.
Tate & Lyle’s forecast for the year ending March 31, 2020, is for the company to expect continuing progress in Food & Beverage solutions as well as gains from productivity initiatives to offset both lower Sucralose profits and continued market challenges in Primary Products. “As a result we expect earnings per share growth in constant currency to be broadly flat to low-single digit,” he adds.
Other full-year financial highlights reported by the company include a 3 percent increase in Food & Beverage Solutions profit to £143 million (US$181 million). Volume was up 3 percent in North America and up 15 percent in emerging markets. However, it was down 2 percent in Europe, Middle East and Africa.
There was also an 11 percent increase in Sucralose profit to £61 million (US$77 million), but an 11 percent decrease in Primary Products profit to £148 million (US$187 million).
Sweeteners and Starches profit was also 5 percent lower due to higher input costs, while commodities profit was £10 million (US$12.6 million) lower following exceptionally strong profits in fiscal 2018, notes the company.
There was also a 4 percent increase in adjusted profit before tax and a 4 percent increase in adjusted diluted earnings per share.
Talking to FoodIngredientsFirst last month, Hampton – who was appointed CEO of Tate & Lyle in April 2018 – detailed how the Primary Products and Food & Beverage Solutions businesses roughly account for 50/50 of the company’s turnover. That mix will shift going forward, however, through both organic and merger and acquisition (M&A) growth, he said.
He noted tremendous growth potential in the company’s core focus areas (sweeteners, texturants, fiber-focused health & wellness, stabilizers and functional systems), with “plenty of runway” to serve these categories through the company’s global footprint. Expansion is likely to take place in Asian markets. “I would expect any acquisitions to be either focused on strengthening our current platforms or our geographic position in regions where we are growing faster, which is more East than West because of the prominence of the world’s population in Asia,” he noted.
A “View from the Top” interview piece was also published in the April/May edition of The World of Food Ingredients featuring more details and insights from Hampton.
