11th Feb 2016 08:11
LONDON (Alliance News) - Sugar manufacturer Tate & Lyle PLC Thursday said it remains on track to deliver full year results in line with expectations and that its longer term outlook remains positive despite some of its divisions continuing to face headwinds.
The company said its results for the full year should meet expectations, aiming for an adjusted profit before tax from continuing operations at a constant currency rate of around GBP193.0 million, flat on last year.
However, it said the reported adjusted before tax will be "modestly below" that GBP193.0 million.
"While in the near term we expect weakness in commodity markets to persist, we will continue to target stable earnings from core bulk ingredients and to manage commodities to dampen volatility," said the company.
The company is currently in the last quarter of its financial year, which will end in March, and said its two main divisions, speciality food ingredients and bulk ingredients, both experienced volume growth in the third quarter of the financial year.
The FTSE 250-listed company said its division covering speciality food ingredients "performed steadily" in the last quarter of 2015, with sales volumes higher than a year earlier. Tate & Lyle said strong volume growth in Europe and in Asia Pacific more than offset softer demand in North and Latin America.
The food systems unit also continued to see sales volumes grow in the quarter, also benefiting from the company's acquisition of Gemacon in late 2014. However, the company warned the division's margins were down in the quarter from a year ago as pricing was lower.
The division covering bulk ingredients saw rises in sweetener volumes in North America during the final quarter of 2015, and bulk sweetener pricing improvements will deliver "modest margins gains", it said.
Tate & Lyle said commodities continue to have a "a material adverse impact on performance", especially due to further weakness in the US ethanol market. The company expects the commodities division for the full year to produce a "small" loss.
"The longer term outlook for the business remains positive. In speciality food ingredients we expect the market to grow at mid-single digits, and over time our objective is to grow modestly ahead of the market and to drive margin expansion, supported by increased utilisation of new capacity, growing revenues from new products, and a gradual return to growth in North America," said Tate & Lyle.
Shares in Tate & Lyle were down 5.9% at 547.50 pence on Thursday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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