Tate & Lyle is on track for a profits boost

SWEETENERS and starches maker Tate & Lyle sees a year of profitable growth, helped by strong demand for its sucralose zero-calorie sweetener Splenda and higher prices for its by-products.

The group saw strong growth in sucralose volumes due to the product’s use in more food and drink products, and expects to benefit from higher prices for its by-products, which are largely used in animal feeds.

In other areas, Tate’s corn-based speciality sweetener and starch volumes saw good growth, while it also saw firm demand for its bulk sweeteners in the US and Mexico, helped by the higher price of competing sugar.

“The encouraging start to the financial year has continued during the second quarter with solid demand within a number of our markets in both speciality food ingredients and bulk ingredients, assisted by strong co-product returns,” said chief executive Javed Ahmed.

The group was giving a trading update towards the close of its half-year to the end of September and ahead of its first-half results on 3 November.

In May, the company said it will reopen a mothballed sucralose plant in the United States next year as demand for healthy sweeteners picks up and as its sole plant in Singapore struggles to cope with demand.

The group said it will benefit from £10m of income in the first half from by-products compared with just £5m in the previous first half.

This, coupled with the extra demand for sucralose, is expected to push up consensus earnings per share for the year to March 2012, which currently stand at 50.6p a share.

“We expect consensus is forecasting co-product returns that are below those announced and expect two to three per cent upgrade in financial year 2012 numbers to reflect this and a robust performance by sucralose in the first half,” said analyst Robert Dickinson at Tate’s joint house broker Citi.