Blog: Tate & Lyle shakes up Splenda unit
Dean Best | 21 April 2015
Amid significant pressure on profits from its Splenda sucralose business, UK-based food ingredients group Tate & Lyle has today (21 April) announced plans to try to "maximise returns".
Speculation has swirled around Tate & Lyle's struggling Splenda arm, with reports in the UK earlier this month claiming Japan-based food group Ajinomoto - which manufactures rival ingredient aspartame - was eyeing the business.
This morning, Tate & Lyle announced plans to "re-focus and restructure" the business, which include closing a plant in Singapore and moving all production to the US.
Tate & Lyle said demand for sucralose "remains strong" as food and drink manufacturers look for lower-calorie products.
However, the company said industry capacity is now "well in excess" of demand, hitting prices. And it warned it did not expect that to change materially in the medium term.
In the year ended 31 March 2014, adjusted operating profit for Splenda was GBP62m. For the 12 months to the end of this March, profits from the business are expected to have tumbled by 75% to around GBP16m.
Tate & Lyle said it "continues to anticipate further price erosion" in the new fiscal year and forecast today the unit "will be around break-even" in the year ending 31 March 2016. It estimates Splenda will "return to modest profitability" in the 2016/17 year.
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