Tate & Lyle half-year sales decrease 1% as costs squeeze margins

UK – The British agribusiness firm, Tate & Lyle has reported 1% decrease in sales to US$1.81 billion in the half-year period, as results continue to be impacted by rising costs of doing business.

The company however said it performed according to expectations, having delivered growth in adjusted profit before tax and strong cash flow in the middle of inflation and over the top cost of materials.

Food & Beverage managed to grow in terms of volume, with a 3% increase in North America.

Adjusted profit before tax increased by 2% while Food & Beverage Solutions profit rose 3% to reach US$102 million.

Volume was up 3% in North America and 16% in Asia Pacific and Latin America, while there was a 6% increase in sales of new products.

Primary Products profit was 6% lower at US$111 million, while there was a 1% increase in Sucralose profit to US$35.4 million).

“The strength and leadership team is now complete and is driving a new sense of urgency across the business.

“The business performed in line with our expectations in the first half. Food & Beverage Solutions performed well.

In Primary Products, the sweeteners and starches business delivered solid underlining performance with overall profit in the division due to commodities,” said CEO Nick Hampton during a conference call.

In May, Tate & Lyle CEO who was appointed early this year, outlined plans for US$100 million of cost savings and to boost profits as part of an overhaul after taking up the reins.

He outlined a three-pronged strategy to accelerate business performance and inject more pace into the organisation.

According to him, the three priorities have each made good early progress.

He said the company put in place strategies that helped offset greater cost inflation in North America.

“As a result, our guidance for the financial year remains unchanged and the Board has increased the interim dividend by 2.4%,” he added.

“We performed in line with our expectations in the first half delivering growth in adjusted profit before tax and strong cash flow despite cost inflation from materials and transport in North America, and lower profits in Commodities.”

Commodities profit was US$6.5m lower, while there was a 5% increase in earnings per share benefiting from lower finance costs and lower adjusted effective tax rate.

In May, Tate & Lyle PLC announced it had entered into an agreement to acquire a 15% equity holding in Sweet Green Fields.