Tate & Lyle is off to sweet start to year

BRITISH sweetener and starches maker Tate & Lyle said it had made an encouraging start to the new financial year and expected another year of profitable growth amid growing demand for its speciality ingredients.

The London-based group, which makes sucralose zero-calorie sweetener Splenda, was giving an update for its first quarter trading ahead of its annual general meeting.

Overall first-quarter volumes grew at its speciality food ingredients division driven by strong sales of Splenda and firm demand for its bulk ingredients. By-products returns were also helped by higher market prices, the company said.

“Overall, our expectations for the full year remain unchanged and we continue to anticipate another year of profitable growth,” the group said in the update. In May, the company said it will reopen a mothballed Splenda plant in the United States next year as demand for healthy sweeteners picks up after it reported a 34 percent rise in annual profits in its year to end-March 2011.

“The shares have performed well year to date, outperforming the FT Allshare by 19 per cent and on 13 times FY2012 PE, they look broadly fairly valued in our view,” said analyst Julian Hardwick at house broker RBS. He added that with expectations for the full year unchanged it suggests the group is confident for the current consensus for pre-tax profits of around £290m after £263m the previous year. Two years ago the company sold its once core sugar refineries.

Tate & Lyle’s share jumped three per cent in early trading before trailing off to close 0.1 per cent down.