Shares in Tate and Lyle edged up 0.3 per cent to £6.12 in early trading, even though it posted considerably lower half-year profits than in 2013.
In the six months to 30 September, the sugar-based foods company reported a pre-tax profit of £104m – a 40 per cent drop from £173m during the equivalent period in 2013.
Basic earnings per share, meanwhile, were 14.7p – almost half their 2013 value of 28p. But the results met investor expectations – in September, the company issued its third profit warning of the year.
Outlook for the year remains unchanged, with adjusted profit still predicted to fall between £230m and £245m. This is 22 per cent lower than analyst forecasts when the profit warning was released in September.
Tate & Lyle attributed the lower profit to “significant” operational supply chain disruption and an increasingly competitive market for its artificial sweetener, Splenda Sucralose.
It said the prolonged and severe US winter hit inventories, while the an industrial accident at its Splenda plant in Singapore resulted in it having to be shut down.
“These events materially disrupted our supply chain as we had to manage a combination of operational challenges in our plant network, low absolute levels of inventory, and misalignments between customer demand and inventory location,” the company said in a statement this morning.
Chief executive Javed Ahmed said: “As we announced on 23 September, the group’s performance in the first half has been significantly held back by operational and supply chain disruption and an increasingly competitive market for Splenda Sucralose.
Notwithstanding these factors, the fundamentals of our business are robust with particularly strong growth in the emerging markets for our speciality food ingredients business excluding Splenda Sucralose, a high quality innovation pipeline and a resilient, cash generative bulk ingredients business. We are firmly focused on taking the necessary steps to work through the issues we face and improve the group’s performance.