Tate & Lyle today (31 October) posted a 19% drop in first-half profits due to “difficult” conditions in sugar trading and the weakness of the US dollar.
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The UK-based group booked underlying pre-tax profits of GBP120m (US$249m) for the six months to 30 September. Sales inched up 1% to GBP1.7bn but rose 8% once currency fluctuations had been stripped out of the figures.
Tate & Lyle has issued three profit warnings this year, the last of which in September led to the company’s shares tumbling by almost a third.
Losses from its sugars business, higher corn costs and a weak dollar have hit the business and increased the pressure on chief executive Iain Ferguson.
Ferguson said the current financial year had proved “more challenging than expected” while corn costs and the US dollar “remain important areas of uncertainty”.
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By GlobalDataHowever, Ferguson insisted Tate & Lyle had made “important progress” in strategy of focusing more on value-added food ingredients.
He said: “We completed further significant steps to reduce the impact of our exposure to volatile raw material and commodity markets and regulated regimes, notably through the sale of five of our European starch plants.”
Profits from Tate & Lyle’s food ingredients business in the Americas dipped to GBP84m, as corn costs leapt by 50%, due in part to rising biofuel production in the US.
Earnings from Tate & Lyle’s sucralose business were flat on a constant-currency basis at GBP32m. Once currency fluctuations were stripped out, sucralose sales were up 4%, thanks to “encouraging sales growth” in Latin America, Europe and Asia-Pacific.
