Tate & Lyle plc has said that it expects first-half operating profit to fall as a result of soft demand from the US beverage sector.
In a trading update today (4 October), the company said its second-quarter performance was “broadly” in line with expectations. However, the company said lower US volumes hit both its speciality food ingredients and bulk units. Tate added that lower selling prices for its sweetener brand Splenda would dent the quarterly result.
Looking to the full year, Tate said it expected “another year of profitable growth”. Tate & Lyle shares edged up 1.69% at 9.50am.
While the group maintained its outlook, the firm also took the opportunity to flag its profitability is “sensitive” to currency fluctuations and emphasised that the outcome of sweetener pricing rounds would impact the bottom line in the forth quarter.
Investec Securities analyst Martin Deboo said the trading update pointed to a “weaker than expected” first-half performance.
“We read Tate’s Q2 update as cautious and downbeat relative to expectation,” he wrote in an investor note. “The story of the half is one of weakness in the USA… US sweeteners were soft against a tough comp, driven by last year’s hot summer.”