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Tate turns sour

Ingredients giant Tate & Lyle (TATE) has issued a surprise profit warning
September 25, 2014

Ingredients giant Tate & Lyle (TATE) has issued a surprise profit warning, citing extended supply chain disruption in the second quarter and increased pricing pressure for its artificial sweetener, Splenda sucralose.

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The supply chain issues from the first quarter, mainly caused by the polar vortex in the US, apparently persisted for longer than expected and caused greater disruption than first thought. Meanwhile, sucralose volumes in the first half will be lower than anticipated and prices for the full year will be down by a quarter, compared with previous guidance of a 15 per cent decline. As a result, £40m of "non recurring" costs are expected in the first half, £20m more than expected. Furthermore, sucralose pricing pressure and supply chain costs will run into the second half, incurring a further £10m of one-off charges, and offsetting solid performance elsewhere in the business. Consequently, profit for the full year will be £230m to £245m, compared with a consensus forecast of £295m, implying a 19 per cent downgrade.