UK food ingredients group Tate & Lyle plc has said its first-half profits remained flat year-on-year, with growth expected to pick up in the second half.

“Overall, we expect to report adjusted operating profit for the group for the first half in line with our expectations and the prior-year period, which benefited from an exceptionally strong performance from co-products,” the group said in a trading update today (27 September).  

In the first half of its previous financial year, Tate & Lyle reported earnings of GBP194m.

Tate & Lyle said that the performance of its speciality food ingredients business was hit by the economic difficulties in Europe. Operating profit it expected to be down year-on-year due to lower volume shipments as demand in Europe remains subdued, the company revealed. Profits at the unit were also hit by a strike in Turkey and previously announced changed in fixed costs associated with the business transformation initiatives.

However, Tate emphasised the group had seen an upturn in the second quarter, with “good growth” in sucralose volumes and a strong performance in the US and emerging markets working to offset weakness in Europe.

In bulk ingredients, Tate said first-half operating profit was expected to be up on the year as a strong showing from liquid sweeteners offsetting a tough US ethanol market. Nevertheless, the company conceded “tight” market conditions and concerns surrounding the quantity and quality of US corn crops meant that corn prices remained high, impacting profits at the unit.

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“With both divisions having faced headwinds H1 on H1, we think this is a pretty good performance,” Panmure analyst Graham Jones wrote in a note to investors. “While Tate flags the current level of uncertainty surrounding the global economy and volatile corn markets, it continues to expect profit growth for the year.”

Looking to the remainder of the year, Tate & Lyle said that it expects to gain momentum in the second half, despite the ongoing economic uncertainty in Europe and high corn prices.

“Overall, while recognising the current level of uncertainty around the wider economy and volatile corn markets, we continue to expect to make progress this financial year,” the group said.

The company will report its half-year results on 8 November.