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Tate & Lyle making progress

The ingredients company is working on the objectives set out by new chief executive Nick Hampton
November 9, 2018

When Nick Hampton took over as chief executive of Tate & Lyle (TATE) in the spring, he set out three main objectives: improve customer relationships, develop new products, and simplify the business. Encouragingly, this half-year report shows progress.The number of customer meetings has doubled, with around 40 per cent of new products now co-developed, and more products are being sent directly to customers - in turn, cutting down on warehousing needs.

IC TIP: Buy at 696p

But 'simplifying the business' resulted in around £47m of exceptional charges during this period, the most significant of which was a £40m non-cash impairment taken against the oats ingredients business. A further £2m related to wider restructuring efforts.

But analysts were still impressed that North American food and beverage volumes rose 3 per cent in a flat market, while volumes sold across Asia Pacific and Latin America jumped by 16 per cent. Sucralose volumes grew 7 per cent, beating broker Investec's expectations of 1 per cent, although continued pricing pressure as a result of excess market capacity kept profits down.

Analysts at Investec expect pre-tax profits of £302m during the year to March giving EPS of 50.9p, compared to £301m and 50.1p in FY2018.

TATE & LYLE (TATE)   
ORD PRICE:696pMARKET VALUE:£3.25bn
TOUCH:695-696p12-MONTH HIGH:714pLOW: 523p
DIVIDEND YIELD:4.2%PE RATIO:15
NET ASSET VALUE:302p*NET DEBT:24%
Half-year to 30 SepTurnover (£bn)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20171.4016126.88.4
20181.3811317.68.6
% change-1-30-34+2
Ex-div:22 Nov   
Payment:4 Jan   
*Includes intangible assets of £354m, or 76p a share