UK: Tate & Lyle underlying profits up 16% but sugar regime costly
Tate & Lyle posted a 16% rise in underlying profit yesterday (25 May), with a strong performance from artificial sweetener Sucralose and US growth helping to offset a weaker performance in European markets. However, a one-off exceptional impairment charge relating to changes to the European sugar regime hit profits hard.
The food ingredients and sugar company said that sales for the year to 31 March totalled GBP3,720m, an increase of 11% or GBP381m above last year.
Exchange rate translation increased sales by GBP88m. Underlying sales growth was driven by an increase of GBP74m from sales of value added products, including Splenda Sucralose, and GBP232m from higher volumes and prices within the sugar trading business.
These gains were partially offset by the impact of lower selling prices in Europe.
"This has been another strong financial performance from Tate & Lyle, driven substantially by our value added businesses and benefiting from a good operating performance and certain one-off items at the end of the year. These results have been achieved despite absorbing significantly increased energy costs across the business. In addition, our European operations were adversely affected by an oversupply of sugar in the EU market and other factors arising from the reform of the EU sugar regime," Tate & Lyle chairman Sir David Lees commented.
Pre-tax profit before exceptional items increased from GBP254m last year to GBP295m this fiscal year.
However, this figure excludes a GBP272m impairment charge resulting from changes to EU sugar regulation. When this one-off charge is taken into account, the company made a net loss for the year of GBP30m.
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