Earnings took a tumble at ingredients giant Tate & Lyle's (TATE) during the first six months of the year, but this had been widely expected and meant that the 5 per cent fall in adjusted pre-tax profit to £173m was in fact bang in line with consensus forecasts.
The profit decline was driven by a weak beverage season in the US, which slightly dampened trading in the speciality food ingredients (SFI) division and significantly held back sweetener volumes in Tate's bulk ingredients segment, causing divisional adjusted operating profit there to fall 11 per cent to £92m, despite a 2 per cent rise in sales.
Sales in the SFI division grew 7 per cent at constant currencies to £519m, thanks to higher volumes in emerging markets and Europe. Profit, however, climbed just 1 per cent to £112m, thanks to the aforementioned headwinds in the US and lower than expected selling prices for Splenda sucralose. Tate is investing heavily in food ingredients, which it sees as the big driver of growth as it is less vulnerable to fluctuating commodity prices and has significant scope to expand geographically. It's higher margin too, accounting for 30 per cent of group revenue, but 55 per cent of profit.
Investec expects full-year pre-tax profit of £338m and EPS of 57.1p, up from £327m and 56.6p in 2013.
| TATE & LYLE (TATE) | ||||
|---|---|---|---|---|
| ORD PRICE: | 810p | MARKET VALUE: | £3.8bn | |
| TOUCH: | 809-810p | 12-MONTH HIGH: | 890p | LOW: 704p |
| DIVIDEND YIELD: | 3.3% | PE RATIO: | 16 | |
| NET ASSET VALUE: | 212p* | NET DEBT: | 34% | |
| Half-year to 30 Sep | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 1.63 | 168 | 35.1 | 7.40 |
| 2013 | 1.72 | 158 | 28.0 | 7.80 |
| % change | +6 | -6 | -20 | +5 |
Ex-div: 20 Nov Payment: 3 Jan *Includes intangible assets of £370m, or 79p a share | ||||
