Tate & Lyle takes stake in Sweet Green Fields, FY18 results reveal profits pick up

24 May 2018 --- Tate & Lyle PLC is to acquire a 15 percent equity holding in Sweet Green Fields, one of the largest privately held, fully integrated global stevia ingredient firms, in a deal which brings the two companies closer together after they have already been in a worldwide distribution deal for the last year. The acquisition will build on last April’s agreement which saw Tate & Lyle become the exclusive worldwide distributor of Sweet Green Fields’ portfolio of stevia-based ingredients and the new strengthened deal promises “breakthrough” stevia products.

It comes at the same time as Tate & Lyle says it has “delivered another year of progress” as it releases its full-year results for the year ended March 31, 2018.

The British-based multinational agribusiness says that although high oil and commodity prices weigh in on earnings, profits rose by nearly a quarter, but sales dropped in its latest financial year.

Pre-tax profits increased 23 percent to £286 million (US$382 million) in the year to March, while sales fell 2 percent to £2.7 billion.

Nick Hampton, Chief Executive, Tate & Lyle, who took over from Javed Ahmed, who stood down at the end of March, says Tate & Lyle delivered another year of progress, with good profit and cash delivery.

Sweet Green Fields is one of the largest privately held,
fully integrated global stevia ingredient firms.

“Profit increased in all businesses, cash generation remained strong, and return on capital employed increased by 190 bps to 16.2 percent,” he says. “The group remains in a strong financial position, increasingly well-positioned to address growing consumer demand for healthier diets with less sugar, calories and fat and more fiber.”

“To accelerate business performance and inject more pace into the organization, we are implementing three programs to sharpen our focus on our customers, accelerate portfolio development and to simplify the business and deliver greater productivity.”

He adds how for the year ending March 31, 2019, the company expects growth in earnings per share in constant currency to be in a mid-single digit range, albeit towards the lower end due to energy and transport cost inflation in North America and a healthy year of commodities performance in fiscal 2018.

“Looking further ahead, as our three programs gather momentum, we expect growth in earnings per share to accelerate, organic return on capital employed to improve and strong cash generation to support our progressive dividend policy.”

Tate & Lyle’s actions to accelerate business performance include a growth strategy refocused around the three programs;
–    Sharpen focus on its customers and critical categories of beverages, dairy, and soups, sauces and dressings;
–    Accelerate portfolio development: innovation, partnerships, acquisitions;
–    Simplify the business and deliver US$100m productivity improvements over four years.

As the programs gather momentum, Tate & Lyle expects growth in earnings per share to accelerate, organic return on capital employed to improve and strong cash generation to support progressive dividend policy.

Meanwhile, the company has also renamed two divisions: Primary Products and Food & Beverage Solutions (including Sucralose).

Other financial highlights

Tate & Lyle also says there has been a 13 percent increase in adjusted profit before tax at constant currency with profit growth in all businesses and an 8 percent increase in Food & Beverage Solutions profit to £137 million (US$183 million), with good volume and New Products momentum.

Sucralose profit increased by 5 percent to £55 million (US$73.4 million). There was a 30 percent increase in Primary Products profit to £166 million (US$221 million) and an 11 percent profit growth in main business, Commodities +£24 million (US$32 million).

There is also 7 percent increase in earnings per share at constant currency and £53 million (US$70.7 million) higher Group statutory profit before tax with improved trading and lower exceptional costs.

Net debt £60 million (US$80 million) lower, with adjusted free cash flow £22 million (US$29.3 million) higher at £196 million (US$261 million).

Closer partnership with Sweet Green Fields

Washington-headquartered Sweet Green Fields was established in 2007 and started by providing standard stevia extracts to the food and beverage industry. Now, these extracts come as non-GMO Project Verified and over recent years the company has created an innovative series of stevia extracts covering a wide range of customer application needs.

Intesse Stevia is specifically created to deliver a clean and smooth sweet taste, especially at high concentration for food and beverages with deep sugar-reduction goals.

On the new deal with Sweet Green Fields, Hampton says he is delighted in the stake in the stevia producer and to be building a closer partnership.

“Their industry-leading portfolio of stevia-based ingredients is highly complementary to our portfolio of proprietary sugar reduction solutions and the results from the first year of our global distribution partnership have been very encouraging,” he adds.

“We look forward to working together with the Sweet Green Fields team to deliver truly breakthrough, great tasting stevia products for our customers.”

Jingang (Jack) Shi, Chairman, Sweet Green Fields, echoes this. “Sweet Green Fields continues to grow its business strongly, driven by our leading portfolio of stevia-based ingredients and solutions,” he says. “We are delighted to have the opportunity to strengthen our relationship with Tate & Lyle and take our business to the next level of success.”

“Today’s full-year results announcement and equity acquisition news show that Tate & Lyle is well-positioned to help our customers to meet growing consumer demand for healthier diets with less sugar, calories and fat and more fiber,” a Tate & Lyle spokesperson tells FoodIngredientsFirst.

“As consumer demand for sugar-reduced food and beverages continues to grow, so too does demand for products containing ingredients and solutions from nature. The global stevia market has grown by a CAGR of 19 percent over five years and is forecast to continue to grow at a similar level over the next five years.”

“Purchasing this 15 percent equity holding enables us to build an even closer partnership with Sweet Green Fields, one of the largest privately held, fully integrated global stevia ingredient companies. This move will help both businesses to ensure a sustainable supply chain further,” says the spokesperson.

“Tate & Lyle’s broad portfolio of sweeteners, applications expertise and strong innovation pipeline, combined with Sweet Green Fields’ expertise in the science of stevia, from the field to product, has created significant opportunities for our customers’ new product innovation.”

By Gaynor Selby