Tate & Lyle records six month division growth despite revenue challenges
Tate & Lyle has recorded growth for its food and beverages division in its latest half year results amid challenging conditions, with its portfolio including a wide range of confectionery and bakery solutions, reports Neill Barston.
The company reported revenues up 1%, totalling £475 million for the first six months (including £98 million business segment profit, up 9%) in its financial year ending September 2020.
Its latest results came against an uncertain global trading environment that resulted in its overall group sales for the period being down 4% year-on-year at £1.39 billion.
The business, which remains focused on natural sweetening solutions and ingredients, stressed that all of its manufacturing facilities, remained open amid the coronavirus pandemic, but conceded that market demand in the first half closely correlated to the imposition and easing of lockdowns within its largest markets of North America and Europe. In April and May, the company noted a significant reduction in demand for products used in out-of-home consumption, partially offset by stronger in-home consumption.
However, In June and during the second quarter demand improved as lockdowns eased, though out-of-home demand remains below pre-pandemic levels. In the higher growth markets of Asia Pacific and Latin America, demand improved in China during the half as it emerged from lockdown, while in Latin America demand slowed as the half progressed and the region went into lockdown.
The company said its performance reflected strong operational execution, as well as productivity benefits and cost reductions across its portfolio. It also reflected strong Commodities profits, as well as foreign exchange gains within its businesses in Latin America.
Nick Hampton, chief executive commented that the first half of the year had demonstrated its ‘strength, resilience and agility’ noting the relative success of its food and drink solutions.
He said that the business was making good headway against its four immediate goals of look after our colleagues and communities, strengthening customer relations, progressing core strategy and maintaining its financial strength.
Hampton commented: “This performance reflects the outstanding commitment of our people who have kept our operations running and our customers served through the pandemic. Our purpose of Improving Lives for Generations remains at the heart of our response to Covid-19, inspiring our people to look after their colleagues, families and local communities. I am very proud of, and humbled by, their resilience in the face of so many challenges.
“Both business divisions performed well supported by excellent operational performance and rigorous cost discipline. Primary Products delivered steady earnings despite a significant reduction in out-of-home consumption in North America. Food & Beverage Solutions delivered revenue and profit growth as our technical capabilities in sweetening, texture and fibre fortification supported customer demand for products that are lower in sugar, calories and fat, and with added fibre.”
“We continue to make strategic progress. We signed an agreement to acquire a speciality tapioca food starch business in Thailand expanding our customer offering of plant-based, clean-label texturant solutions. Our new business and innovation pipelines remain healthy, New Products revenues are up 8% and we continue to find creative ways to use technology to support and connect with our customers.”
However, he added that considerable market uncertainty remains, notably with regard to out-of-home consumption, which remains below pre-pandemic levels, as well as its annual sweetener contracting round has yet to be completed. Consequently, it is not issuing guidance for year ending March 31 2021.