The Group’s trading performance in the first quarter was in line with our expectations and guidance for the full year remains unchanged.
Speciality Food Ingredients made an encouraging start to the year and performed ahead of the comparative period. SPLENDA® Sucralose performed solidly as we continued to pursue volume only where we see value. The consolidation of sucralose manufacturing into our facility in Alabama, USA, is progressing as planned supported by good customer engagement. Volume growth for Food Systems was ahead of the comparative period benefitting from the acquisition, last year, of Gemacom in Brazil. Volume across the balance of the Speciality Food Ingredients business was slightly behind the comparative period, with volume improving as we exited the quarter. We continued to take steps to address the impacts of the supply chain disruption experienced last year and we expect volume growth to strengthen through the remainder of the year as the additional capacity comes on-line in the second half. The volume of new products grew strongly in the quarter.
Bulk Ingredients, excluding commodities (ethanol and co-products), performed steadily and slightly ahead of the comparative period supported by solid sweetener demand. However, this was more than offset by the impact of commodities, including the continuation of low US ethanol margins.
The process of obtaining regulatory approval for the re-alignment of the Eaststarch joint venture in Europe is progressing well and we expect to complete this transaction around the end of the second quarter of the financial year.
SALE OF EU SUGARS; UPDATE ON LITIGATION
As previously announced and disclosed in our 2015 Annual Report, American Sugar Holdings (ASR) raised a number of claims totalling in the region of £40 million relating to its acquisition of the Group’s EU Sugars business in September 2010. A trial of these proceedings was held in the Commercial Court in London in early May 2015, with the judge’s verdict expected later in the year.
FINANCIAL POSITION AND BALANCE SHEET
Net debt was slightly lower than the position at 31 March 2015 aided by the translation effects of a stronger sterling.
Following the quarter end, on 21 July 2015, we priced a US$400 million debt private placement with notes to be issued maturing in 8, 10 and 12 years, extending the average maturity of our debt by approximately 2 years. The transaction is expected to complete on 29 October 2015.
Overall, before the impact of exchange rate movements1 and the final timing of the completion of the Eaststarch transaction, expectations for the Group’s full year performance remain unchanged from our guidance in May.
1Guidance assumed exchange rate of GBP: USD £1.00:$1.54.
A conference call will be held today at 08.00am BST, hosted by Javed Ahmed, Chief Executive and Nick Hampton, Chief Financial Officer. Participants are requested to dial in at least 10 minutes before the commencement of the call. Dial in details are as follows:
Standard International Access: +44 (0) 20 3003 2666
Password: Tate & Lyle
UK replay number: +44 (0) 20 8196 1998
Replay access PIN: 1391453
A replay of this call will be available after the end of the live call for 14 days until 11 August 2015.