" /> Tate Lyle profit up in first half | World Grain

Tate & Lyle profit up in first half

by World Grain Staff
Share This:
Search for similar articles by keyword: [Tate and Lyle], [Earnings report]

LONDON, ENGLAND — Tate & Lyle on Nov. 5 reported  adjusted operating profit of £100 million ($152 million) for the six-month period ended Sept. 30,up 22% from £81 million in the same time period of the previous year. Six-month sales of £1.176 billion ($1.79 billion) were down 2% from £1.2 billion.

Within specialty food ingredients, adjusted operating profit of £76 million was up 28% from £59 million in the same six-month period of 2014. Six-month sales of £447 million were up 5% from £426 million. Within bulk ingredients, six-month operating profit of £42 million was down 11% from £47 million, and six-month sales of £729 million were down 6% from £774 million.

Tate & Lyle foresees three ways to strengthen its business mix over the next five years. By 2020, the company wants 70% of its profits to come from specialty food ingredients, 30% of its specialty food ingredients sales to come from Asia Pacific and Latin America, and $200 million of sales to come from new products.

“Over the last five years Tate & Lyle has been evolving from, essentially, a commodity sugar and bulk sweetener business to a more value-based business focused on specialty food ingredients,” said Javed Ahmed, chief executive of London, England-based Tate & Lyle, in a Nov. 5 earnings call. “It is a strong and higher quality business today, and our aim is to further strengthen it over the next five years by building on the foundations we have laid.”

Ahmed said the percentage of profits from specialty food ingredients increased to 47% in fiscal year 2015 from 32% in fiscal year 2010. Now the goal is 70% of profits by 2020.

“We expect to get there through a combination of organic growth and selective bolt-on acquisitions, which we continue to actively pursue,” Ahmed said.

He said Tate & Lyle expects to further increase the geographic spread of specialty ingredients, excluding Splenda sucralose, by increasing the proportion of sales from Asia Pacific and Latin America to 30% by 2020.

“This would mean the more mature North American region accounting for no more than 50% of sales, despite the expectation of growth in North America over the period,” Ahmed said.

North America currently accounts for about 60% of specialty food ingredients sales, excluding Food Systems and Splenda sucralose, but the specialty food ingredients business in North America has grown at a compound annual growth rate of only 0.4% over the past four years, he said. Future growth could come in such subcategories as healthy snacks and nutrition bars, he said.

For new products, Tate & Lyle’s ambition is for products launched within the last seven years to equal or exceed 10% of specialty food ingredients sales by 2017 and to generate sales of $200 million by 2020, Ahmed said.

“We continue to manage our innovation pipeline through a disciplined process with clear stage gate milestones,” he said. “Over the last 18 months we have focused the pipeline on fewer but larger opportunities such as Dolcia Prima, thereby enabling greater investment for each project.”

Partners