Tate & Lyle’s performance impacted by reduced consumer demand, yet forecasts improvements
Tate & Lyle at Gulfood Manufacturing. Pic: Neill Barston
The Tate & Lyle Group has released its latest annual results, which reveal the business has endured challenging conditions with overall revenues down 2% against last year’s figures, to £1.6 billion, amid ‘softening consumer demand’ during a notably disrupted trading period, reports Neill Barston.
However, the company noted that its earnings before tax, which stood up 7% year-on-year at £328 million had placed it in a robust position, which has also been bolstered by the recent sale of its stake in US primary products business, Primient, which includes applications for the confectionery sector.
According to the business, its results were also influenced by customer ‘destocking’ in reducing product ranges during the past year, in response to an ongoing cost of living crisis in many international market segments.
The sale of Primient agreed two years ago, is set to net the business £279 million in July, and comes as the business seeks to strategically reposition itself as an industry solutions provider operating across the food and drink sector.
Confectionery Production met with the business at the last edition of Gulfood Manufacturing, where it reported encouraging performance signs, noting resilient demand for its product ranges, including for the snacks and confectionery segments.
As our title has covered, global markets have faced sustained periods of inflation due to rises in core ingredient costs, which has had an industry-wide impact, and consequently been another notable factor in regards to consumer confidence.
However, in its outlook, the company said that it had weathered ‘an unprecedented cycle of inflation and volatile consumer demand well,’ and had managed to deliver a compound average growth rate of revenue of 11% and adjusted EBITDA of 10% for the three years ended 31 March 2024.
The business added that in the past 12 months, it had prioritised revenue and margins ahead of volume growth, and had noted a gradual trend of improving confidence within its markets, anticipating ‘good growth’ in 2025.
Outlook optimism
Nick Hampton, Chief Executive said: “In challenging market conditions, it’s been another year of robust financial performance and strategic progress, with strong profit growth and productivity delivery, excellent cash generation, and further progress to transform the business.
“The actions taken over the last six years have created a higher quality and more resilient business, with the agility to navigate the challenging economic environment and softer consumer demand we saw last year. While managing these short-term market dynamics, we also continued to set up the business for long-term growth by increasing investment in technology, innovation, solution selling and new capacity, and by intentionally moving away from low margin business. I am particularly pleased by our progress building our solutions business with customers, a core element of our strategy, with solutions new business wins continuing to grow.
“The separate announcement we made today of the sale of our remaining stake in Primient represents an important milestone for our business. With this sale, the transformation of Tate & Lyle into a fully-focused speciality food and beverage solutions business is complete. We are now well-positioned to capture the significant growth opportunities ahead as we look to provide our customers with the solutions they need to meet growing consumer demand for healthier, tastier and more sustainable food and drink. Our robust balance sheet, strong cash generation and the proceeds from the sale of Primient underpin our confidence to enhance shareholder returns through the share buyback programme, whilst retaining the flexibility to pursue both organic and inorganic growth opportunities. We are excited by Tate & Lyle’s future.”
