Tate & Lyle looks for sweeter sales despite sluggish food demand

Marion Dakers
Demand Outstrips Supply For Sugar Substitute Splenda
Tate & Lyle makes Splenda (Source: Getty)

Ingredients maker Tate & Lyle will this week reveal whether it has kept its turnaround on track amid slower demand for its products.

Analysts at Liberum have pencilled in nine per cent growth in pre-tax profits for the year to the end of March, as margins improve on broadly flat sales of £2.75bn. However, the half-year results on Thursday could reflect the slower sales of sweeteners that other manufacturers such as Cargill have recently noted.

The firm split from its sugar-producing namesake in 2010 and now focuses on Splenda sweetener, texturants and animal nutrition.

Read more: Splenda-id: Tate & Lyle's profits up 85 per cent following pound slump

Tate & Lyle issued a string of profit warnings in 2015 as the price of sucralose collapsed, and the firm has since cut its US bulk ingredients business in favour of specialities such as added fibre and starches.

The restructuring allowed it to post an 85 per cent rise in profits for the last financial year, helped in part by the weak pound boosting the value of overseas sales.

Nevertheless, sluggish consumer demand from some clients is believed to have put a dent in the group’s recent sales to North American food and drink manufacturers. Tate & Lyle shares have been among the biggest losers in the consumer goods industry over the past year, losing 15 per cent of their value.

The company recently doubled capacity at its maltodextrin factory in Slovakia, which makes a corn-based sweetener used in infant formula, but has made no major takeovers since its separation from the sugar business.

Analysts at Investec have pointed out that Tate & Lyle’s organic growth forecasts only get it 70 per cent of the way towards its targets for 2020. “Whether new chairman Gerry Murphy can improve the company’s M&A track record remains to be seen,” they said.

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