UK ingredients company Tate & Lyle said today (6 November) that it is “well positioned” to face the global economic slowdown, reporting “sound” first-half sales and profit growth.
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Adjusted pre-tax profit rose 4% in the six months to 30 September, increasing to GBP128m (US$203.3m), while operating profit increased by 3% to GBP150m.
Revenues climbed 25% from GBP1.4bn in the comparable period of last year to GBP1.7bn in the first half of this year.
The company said that results were boosted by favourable currency exchange, which added GBP78m to sales, GBP9m to operating profit and GBP8m to pre-tax profit.
Earnings were also driven by growth at its US food and industrial ingredients business, which saw a 30% increase in operating profit year-on-year, Tate & Lyle added.
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By GlobalDataThis latest update follows a series of profit warnings caused by the weak US dollar, low EU sugar prices and higher costs. Improvements, the company said, were the consequence of its four-year “reshaping” programme, which is now nearing completion.
“We are now fully focused on delivering returns on the asset base, generating stronger free cash flow across the business and making progress towards our longer-term target of a 20% return on net operating assets,” the group said in a trading update issued this morning.
Looking to the remainder of the year, Tate & Lyle was upbeat on its prospects.
“Whilst the increasing uncertainty in global economic conditions makes any statement about the outlook particularly difficult, Tate & Lyle’s diverse and balanced portfolio of ingredients… makes us, in common with our sector, more resilient than many others to recessionary pressures in the wider economy,” the company said.
Moving into the second half, the company predicted continued sales and earnings growth at its food and industrial ingredients businesses in the Americas and Europe and, although it expects continued margin pressures at its sucralose unit, sales gains are also anticipated.
Although the group warned that the EU sugar market continues to be “very difficult”, it said it expects market equilibrium to be re-established and raw materials costs to decline.
