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Tate & Lyle hit by lockdowns

Demand patterns transformed as restaurants, bars and cinemas closed

Tate & Lyle hit by lockdowns

Tate & Lyle (TATE) saw its adjusted pre-tax profits grow 4 per cent to £331m in the year to March, with profits in its food and beverage solutions division climbing by a tenth to £162m. But the manufacturer was hit by coronavirus lockdowns in April: its bulk sweeteners business saw volumes drop by more than a quarter as consumption at cinemas, restaurants and bars nosedived. 

IC TIP: Hold at 644p

“At some point that will normalise again but that depends on the length and the severity of the pandemic,” said chief financial officer Imran Nawaz. But given the continued uncertainty, management has shied away from issuing guidance for its 2021 financial year. The group has, however, taken action to mitigate the impact of lower demand, including a freeze on discretionary salary increases, non-essential discretionary spending, and recruitment of all but essential new staff.  

The company has also extended its savings programme by two years, in which it aims to deliver a total of $150m (£123m) over a six-year period through to FY2024.  Management does not normally issue quarterly updates, but flagged that it will report on the first quarter on 23 July 2020 in order to keep its stakeholders informed. 

Broker Kepler Cheuvreux forecasts adjusted diluted EPS of 53.57p for March 2021, compared with 57.8p in FY2020. 

TATE & LYLE (TATE)   
ORD PRICE:644pMARKET VALUE:£ 3.02bn
TOUCH:636-667p12-MONTH HIGH:811pLOW: 498p
DIVIDEND YIELD:4.6%PE RATIO:12
NET ASSET VALUE:298p*NET DEBT:32%**
Year to 31 MarTurnover (£bn)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20162.3612626.128.0
20172.7523355.028.0
20182.7128657.028.7
20192.7624039.229.4
20202.8829652.829.6
% change+4+23+35+1
Ex-div:18 Jun   
Payment:31 Jul   
*Includes intangible assets of £340m, or 73p a share **Includes lease liabilities of £171m