Tate & Lyle reports challenging market conditions for industry ingredients and solutions
The Tate & Lyle ingredients and industry solutions group has reported challenging global market conditions, as the business continues to evolve its strategies during the ongoing coronavirus pandemic, reports Neill Barston.
According to the firm’s second quarter trading update, revenues for its food and drink-based series – which include a number of confectionery applications, showed positive results at £232 million, up 1% for the period ending 30 June, with a 9% growth in new product revenue. Sales volumes were down 2%, which it attributed to reduced demand for ingredients used with ‘on-the-go,’ out of home food ranges, with many nations instituting policies of self-isolating and quarantine conditions over the past few months.
Its primary product categories were also affected, standing at £420 million, 9% lower year-on-year, while demand for bulk sweeteners in the US was down 12% for the period, which again was attributed to reduction in out-of-home consumption trends. In addition, revenues for one of its key sweeteners, Sucralose, were also down 1% for the period, at £39 million.
As Confectionery Production has previously reported, while hospitality-based businesses in lockdown over the past few months which impacted on that element of the market, in-home, shelf-stable product ranges have conversely seen a broad spike in demand, as consumers rushed to ‘panic buy’ stocks of food, including snacks, confectionery ranges that fell into comfort-food categories.
According to Tate & Lyle’s update, its pandemic response has centred upon the health and safety of staff and consumers. US revenue for its sector solutions were down 2% due to reduced demand in the food service industry. Despite this, North America returned to revenue growth in June as lockdown restrictions eased. In Europe, Middle East and Africa revenue was in line with the comparative period reflecting solid demand for in-home consumption. In Asia Pacific and Latin America revenue was 8% higher reflecting good revenue growth in Asia Pacific as China emerged from lockdown, while in Latin America revenue grew modestly, slowing as the quarter progressed and the region went into lockdown.
Among the company’s financial mitigation measures were cost reduction actions including freezing salary increases and recruitment, as well as significantly reducing discretionary costs linked to the business. Procedures were also put in place to preserve cash through re-prioritising capital commitments, with the firm noting that no employees have been furloughed, as well as no government aid having been sought.
Nick Hampton, chief executive, said: “As expected, the first quarter presented many challenges and I am very proud of the way we are navigating the impact of coronavirus. We are encouraged by the improvement in demand we saw in June and the continued strategic progress we are making, with new product revenue growing 9% in the quarter. Our new business pipeline is healthy, we continue to find creative ways to use technology to support and connect with our customers, and all our manufacturing facilities remain fully operational.
“The fundamentals of our business are sound. Demand for ingredients and solutions which enable consumers to enjoy healthier and tastier food and drink is strong, and we have the portfolio of products and technical expertise to help our customers deliver on these trends. Looking ahead, our priorities are clear – to look after our people and communities, strengthen our relationships with customers, continue to progress our strategy and maintain our financial strength. I am confident that our future prospects remain strong.”