Tate & Lyle profits jump 85% as weak pound provides boost

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British ingredient supplier Tate & Lyle has reported an 85% increase in profit before tax, putting the successful performance down to higher sales, a weak pound and fewer exceptional costs.

Total sales increased by 17%, to £2.8 billion (€3.2bn) with pre -tax profit almost doubling from £126m (€144m) to £233m (€267) in the 12-month trading period ending 31 March.

The company’s chief executive, Javed Ahmed, called it a year of strong performance with both business divisions delivering good profit growth.

Bulk ingredients showed “particularly good results” he said, driven by excellent commercial and manufacturing performance, while speciality food ingredients delivered on profit growth and margin expansion.

New products shine

New product sales (products in the first seven years after launch) also increased by 22%, exceeding US$100 million for the first time in the company’s history and demonstrating that “its innovation pipeline is healthy”, according to Ahmed.

This strong performance for new products was seen across all three of the British firm’s platforms of sweeteners, texturants and health and wellness.

In the texturants division, non-GMO starches delivered particularly strong growth, said a financial statement by the company which, this month, announced it has added 17 non-GMO starches to its global portfolio.

It expects growth from new products to continue into FY 2018 as it reaps the benefits from its development and distribution deal inked with Chinese stevia supplier Sweet Green Fields in March this year.

A weak Sterling pound since the UK’s Brexit vote last summer has benefitted the company hugely – it generates less than 2% of its revenue from within the UK – as the favourable exchange rate boosted Speciality Food Ingredients’ adjusted operating profit by £23 million, and increased Bulk Ingredients’ adjusted operating profit by £18 million, with adjusted profit before tax increasing by £40m.

Tate & Lyle said it did not expect the UK’s decision to leave the EU to have a material impact on its business in the near-term.

Meanwhile Trump’s policies, in particular his desire to overhaul the North American Free Trade Agreement (NAFTA), could be disruptive for the company’s operations in the region, but uncertainty remained the watchword.

"Mexico in particular is a key export market for the corn wet milling industry, particularly for high fructose corn syrup. Until we have clarity on the nature of any proposed changes, it is difficult to estimate what the impact, if any, will be.

Ahmed said: “Overall, these results reflect strong execution of our strategy and continued progress towards our 2020 Ambition, and are a testament to the talent and commitment of our people.

“This has been a very encouraging year that reflects the steps we have taken, and continue to take, to build a stronger business with higher quality earnings, capable of delivering sustainable long term growth.”

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