Things look good on the surface at glucose syrup and fructose maker Tate & Lyle (TATE), but there's a lump or two that need to be worked out. The results for last year's first half were restated following an incorrect recognition of income worth £15m linked to the sale of its Eaststarch joint venture in October last year. This means total basic EPS for that period is now 10.5p instead of 13.8p, making the jump in that metric look better this time around. A drop in exceptional costs from £25m to £3m also helped lift profit higher.
With less than 2 per cent of sales coming from the UK, weaker sterling has also helped. Exchange rate movements added £15m to adjusted pre-tax profit and the full-year result should show a £40m gain.
Operationally, performance over the opening six months was mixed. An 18 per cent rise in new product sales to $51m (£41m) actually represents just 2 per cent of the speciality food ingredients division's total revenue. And North American volumes in this division (noting that the country accounts for more than half of sales here) fell by 3 per cent. That said, adjusted operating profit in this division and for bulk ingredients both rose, and chief executive Javed Ahmed said full-year adjusted pre-tax profit would be "higher than we anticipated".
Analysts at Davy expect pre-tax profit of £203m for the year ending March 2017, leading to EPS of 34.7p compared with £126m and 6.5p in FY2016.
| TATE & LYLE (TATE) | ||||
|---|---|---|---|---|
| ORD PRICE: | 830p | MARKET VALUE: | £3.87bn | |
| TOUCH: | 829-830p | 12-MONTH HIGH: | 850p | LOW: 529p |
| DIVIDEND YIELD: | 3.3% | PE RATIO: | 21 | |
| NET ASSET VALUE: | 240p* | NET DEBT: | 37% | |
| Half-year to 30 Sep | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 1.17 | 70.0 | 14.4 | 8.2 |
| 2016 | 1.32 | 128.0 | 27.7 | 8.2 |
| % change | +13 | +83 | +92 | - |
Ex-div: 24 Nov Payment: 3 Jan *Includes intangible assets of £415m, or 89p a share | ||||
