Tate & Lyle shares drop as profit falls; earnings seen flat

Shares in Tate & Lyle slid 4% on Thursday after the company said that full-year pre-tax profit dropped 30% in the year ended 31 March, in line with its expectations, as it continues to restructure its business.

Profit fell to to £224m from £322m, while adjusted sales fell 15% to £2.69bn from £3.15bn. Net debt came in at £504m compared with £353m in 2014.

Looking ahead, the company said it expects adjusted earnings and dividends to be flat this year, following a string of profit warnings.

Last month, Tate, which sells sweeteners and other ingredients, unveiled a plan to exit its European corn-syrup joint venture and restructure its specialty ingredients division.

Chief executive Javed Ahmed said: "It has been a very challenging year for the group, but with the necessary actions underway we are firmly focused on improving our performance and continuing the evolution of Tate & Lyle into a global Speciality Food Ingredients business supported by cash generated from Bulk Ingredients."

Still, the company said the longer-term outlook remains positive and it expects the global market for speciality food ingredients to grow at mid-single digits.

“Our objective is to grow modestly ahead of the market via organic growth supplemented by bolt-on acquisitions. We continue to target sustained cash flows from Bulk Ingredients and to dampen volatility where possible,” said Tate. “As the mix of the group moves towards our higher margin Speciality Food Ingredients business augmented by operational improvements, over time we expect to steadily enhance group profit and returns on capital.

Shore Capital said the results are disappointing as expected. “The significant profit shortfall is evident across both the Speciality and Commodity areas of the group,” it noted.

It added: “With earning visibility still poor in Tate & Lyle, despite all the hard work undertaken across the group, and the downgrade cycle not yet over we can have no higher a rating than 'hold' on the stock .”