23rd Sep 2014 06:59
LONDON (Alliance News) - Sweeteners and starches company Tate & Lyle PLC Tuesday said it faced a challenging first half, and warned that supply chain issues will hit its annual profit.
In a trading statement, the company, known for its low-calorie sweetener Splenda, said supply constraints due to a severe winter in the US, caused operational difficulties in its US corn plants, which left it with much-lower inventories than usual, wiping around GBP10 million off its profit for the first quarter. The company's supply chain was also hit by an industrial accident at it Singapore facility, which drove up costs.
"Despite continuing good demand across Speciality Food Ingredients and a solid performance in Bulk Ingredients, significant operational and supply chain issues, together with a lower Splenda Sucralose performance, now leads us to expect group adjusted profit before tax for the first half to be in the range of GBP95 million to GBP105 million," the company said.
For the year as a whole, ending March 31 2015, Tate & Lyle said its now expecting to report an adjusted pretax profit in the range of GBP230 million and GBP245 million.
Last year it made an adjusted pretax profit of GBP173 million in the first half, and a full-year profit of GBP329 million.
Tate & Lyle's adjusted pretax profit excludes exceptional items and amortisation of acquired intangible assets.
"The disruption to our global supply chain persisted longer than we anticipated, caused by challenges in our plant network, low absolute levels of inventory and misalignments between customer demand and inventory availability, particularly from the emerging markets. As a result, we expect to incur additional non-recurring costs in the second quarter of around GBP20 million, taking the total costs for the first half to around GBP40 million," the company said in its statement Tuesday.
Tate & Lyle said that while its inventories are now being re-built and its supply chain progressively returning to normal, it expects to book further "non-recurring costs" of around GBP10 million in the second half of the financial year.
"The group?s performance in the first half has been extremely disappointing as we have faced significant manufacturing and supply chain challenges, and intense competition in Splenda Sucralose. Despite current operational challenges, I continue to be encouraged by our robust innovation pipeline, the strength of the Speciality Food Ingredients business excluding Splenda Sucralose, and continued growth in emerging markets," Chief Executive Javed Ahmed said in a statement.
Tate & Lyle said it expects its Speciality Food Ingredients business, excluding Splenda Sucralose and Bulk Ingredients, to continue to perform solidly in the second half of the year, although it said this will be more than offset by a softer performance in Splenda Sucralose and the additional supply chain costs.
The company said its innovation pipeline remains robust, and its making preparations to launch two new products in the next few weeks.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
Copyright 2014 Alliance News Limited. All Rights Reserved.
Related Shares:
Tate & Lyle