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Tate & Lyle lays out growth plans

The ingredients company's new chief executive has laid out three objectives to support future growth
May 24, 2018

Tate & Lyle's (TATE) new chief executive, Nick Hampton, used the full-year results to announce three new strategies he believes will “accelerate growth” for the ingredients business. First, Mr Hampton wants to focus on specific product areas such as beverages and dairy, along with a more bespoke approach to its commercial arrangements, tailoring the product range to meet the needs of its customer base. Second, he wants to get new products to the market more quickly. Finally, the $100m (£74.8m) that’s expected to be saved through supply chain changes will be reinvested to support top-line growth.

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On the point of new product development, Mr Hampton said one of the critical areas is sweeteners. In May, Tate & Lyle bought a 15 per cent stake in stevia business Sweet Green Fields, with the option to buy the remaining share later. Back in February the company warned that profit growth in the food systems division would be “moderate” in the second half due to spending on sucralose development. By the full year, profit from sucralose had increased by 5 per cent to £55m, while the food and beverage division saw 8 per cent profit growth to £137m.

Analysts at Citi expect pre-tax profits of £285m in the year to March 2019, giving EPS of 46.1p, increasing to £296m and 47.5p in FY2020.

TATE & LYLE (TATE)   
ORD PRICE:697pMARKET VALUE:£3.25bn
TOUCH:696.4-698.8p12-MONTH HIGH:796pLOW: 523p
DIVIDEND YIELD:4.1%PE RATIO:12
NET ASSET VALUE:293p*NET DEBT:29%
Year to 31 MarTurnover (£bn)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20142.7527752.827.6
20152.34250.928.0
20162.3612626.128.0
20172.7523355.028.0
20182.7128657.028.7
% change-2+23+4+3
Ex-div:21 Jun   
Payment:1 Aug   
*Includes intangible assets of £360m, or 77p a share