Tate & Lyle has reported sales up 7% (in constant currency) for the six months to September 30. Operating profit, however, was down by 26% over the period because of the softer European market and an increase in fixed costs according to analysts.
“Tate & Lyle made progress in the first six months against the backdrop of a strong first half last year, softer market conditions in Europe and the step change in fixed costs associated with the restart of our SPLENDA® Sucralose facility in McIntosh, Alabama and business transformation initiatives,” said Javed Ahmed, chief executive. “Despite facing a number of headwinds this year, I am pleased that the business continues to perform solidly.”
Speciality Food Ingredients sales were up 5% (6% in constant currency) with adjusted operating profit 7% lower than the strong first half last year after absorbing the step change in fixed costs and a softer first quarter
Bulk Ingredients adjusted operating profit was up 6% (7% in constant currency) with strong performance from sweeteners more than offsetting more normal co-product returns following £19 million of additional income in the comparative period
The company said that its business transformation programme continues with encouraging initial customer response to its new global Commercial and Food Innovation Centre in Chicago and the launch of its new venture fund
Looking forward, Tate & Lyle said that, In Speciality Food Ingredients, while it expects continued challenging market conditions in Europe, overall it expects to achieve steady volume growth and solid sales growth for the full year.
In Bulk Ingredients, Tate & Lyle expects the firm demand for liquid sweeteners in the US to continue and demand in its other food markets to remain stable. In Europe, higher corn prices are expected to reduce isoglucose margins in the second half. Market conditions in US ethanol are expected to remain challenging.
As usual, said the company, the outcome of the 2013 calendar year sweetener pricing rounds will influence performance in the final quarter of the financial year.
Overall, concluded Tate & Lyle, while recognising the current level of uncertainty around the wider economy and corn quality and pricing, it continues to expect to make progress this financial year.
