9th Jun 2022 11:20
(Alliance News) - Tate & Lyle PLC on Thursday said its annual profit fell but hailed a "landmark year" which saw it dispose of a 50% stake in its Primary Products business in the Americas.
Costs associated with the deal weighed on profit, though annual revenue climbed.
For the year ended March 31, the food and beverage ingredients provider's revenue rose 14% to GBP1.38 billion from GBP1.21 billion. Statutory pretax profit fell 54% to GBP42 million from GBP90 million.
However, adjusted pretax profit was up 8.2% to GBP145 million from GBP134 million.
At the pretax level, Tate & Lyle booked GBP93 million in exceptional items, up from GBP34 million a year earlier. It noted GBP79 million of the exceptional items were cash costs linked with the transaction to dispose of a 50% of the Primary Products business in the Americas, which is now labelled as the Primient business.
The deal, sealed in April, saw the company sell a stake to New York-based investment company KPS Capital Partners LP.
The sale was originally announced in July 2021. Tate & Lyle and KPS will each own 50% of Primient, with the investment firm having board and operational control. Tate & Lyle had said at the time that it expected to receive gross cash proceeds of USD1.3 billion.
A share consolidation followed the deal. Shareholders received six new shares for every seven existing shares they held.
Tate & Lyle's annual ordinary payout was 29% lower at 21.8p from 30.8p.
The Primient deal cut the company's earnings base by 50%, Tate & Lyle said. Tate & Lyle decided to reduce its dividend as a result. However, its payout ratio was maintained.
"The interim dividend for the year ending 31 March 2023 is expected to be similarly adjusted to reflect the new earnings base," the company said.
Going forward, Tate & Lyle plans a "progressive dividend policy".
Tate & Lyle's 21.8p ordinary payout excludes a special distribution. The company had returned GBP497 million to shareholders in May through a GBP1.07 per share special payout.
"This has been a landmark year for the company. New Tate & Lyle delivered double-digit organic revenue growth across all regions and double-digit profit growth despite significant inflation across the supply chain. We also passed a major strategic milestone by refocusing the group on our faster growing speciality food and beverage solutions business," Chief Executive Nick Hampton said.
"We entered the 2023 financial year with strong top-line momentum, innovation gathering pace and our productivity programme continuing to deliver benefits. Customer demand remains high and while the conflict in Ukraine has caused significant inflation in raw material, energy and logistics costs globally, we are taking actions to mitigate these pressures including supplementary pricing."
Tate & Lyle said GBP100 million worth of inflation has been "mitigated by pricing, productivity, cost discipline and volume-mix".
Looking ahead, CEO Hampton added: "For the year ending 31 March 2023, we expect further progress with adjusted profit before tax in line with market expectations and revenue growth reflecting top-line momentum and the pricing through of higher input costs."
Also on Thursday, the company sealed the USD237 million acquisition of Chinese prebiotic dietary fibre business Quantum Hi-Tech (Guangdong) Biological Co Ltd.
Shares in the company were 2.7% higher at 765.16p each in London on Thursday morning.
By Eric Cunha; [email protected]
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