This Trading Statement covers the period from 1 April 2016 to 30 June 2016, which is the first quarter of the financial year.
The Group made a strong start to the year with profit ahead of the comparative period in constant currency. The encouraging start to the year supports our confidence that we will continue to make progress, at constant currency, in the full year.
Speciality Food Ingredients performed solidly with profit for the division overall ahead of the comparative period. Excluding SPLENDA® Sucralose, profit was slightly ahead of the comparative period reflecting good margin improvement. Volume was slightly lower than the comparative period with good growth in Europe, Middle East and Africa, which benefited from the acquisition of the Slovakia facility, and stabilisation in Latin America, more than offset by softer demand in North America, Asia Pacific and Food Systems.
Profit for SPLENDA® Sucralose was significantly higher than the comparative period benefiting from strong volume growth from the sell-down of inventory carried into the financial year following the consolidation of the sucralose manufacturing footprint.
Bulk Ingredients performed strongly with profit well ahead of the comparative period due to solid demand at the start of the US summer beverage season, robust US bulk sweetener margins, and strong manufacturing performance. In Commodities, performance was broadly in line.
The Group generates less than 2% of its revenues in the United Kingdom, with most revenues being US dollar based. Sterling has weakened significantly in recent weeks and, if current exchange rates were to prevail for the remainder of the financial year, our reported earnings would increase strongly1 due to US dollar and other currency movements.
FINANCIAL POSITION AND BALANCE SHEET
Net debt was lower than the position at 31 March 2016 including the currency translation effects of a weaker sterling and the Group’s largely US Dollar denominated debt.
1With regard to foreign currency, the Group’s results are most sensitive to changes in the US dollar. For the year ended 31 March 2016, it is estimated that a 1 cent change in the sterling:US dollar exchange rate led to a £1.3 million change in adjusted profit before tax. Given the weakening of sterling against most other currencies, changes in the rates of exchange of other currencies is also expected to increase adjusted profit before tax.
A conference call will be held today at 07.30am 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
A replay of this call will be available after the end of the live call for 14 days until 4 August 2016.
UK replay number: +44 (0) 20 8196 1998
Replay access PIN: 5419118
About Tate & Lyle:
Tate & Lyle is a global provider of ingredients and solutions to the food, beverage and other industries, with operations at more than 25 facilities worldwide.
Tate & Lyle operates through two global divisions, Speciality Food Ingredients and Bulk Ingredients, supported by our Innovation and Commercial Development and Global Operations groups. The Group's strategy is to become a leading global provider of Speciality Food Ingredients through a disciplined focus on growth, and by driving Bulk Ingredients for sustained cash generation to fuel this growth.
Speciality Food Ingredients consists of three platforms: Texturants, which includes speciality starches and stabilisers; Sweeteners, which comprises nutritive sweeteners and our range of no-calorie sweeteners including SPLENDA® Sucralose; and our Health and Wellness portfolio which includes speciality fibres and our salt-reduction offering. Additionally, our Food Systems business provides a wide variety of blended ingredient solutions.
Tate & Lyle Bulk Ingredients includes bulk sweeteners, industrial starches and fermentation products (primarily acidulants). Corn co-products from both divisions are primarily sold as animal feed.
Tate & Lyle is listed on the London Stock Exchange under the symbol TATE.L. American Depositary Receipts trade under TATYY. In the year to 31 March 2016, Tate & Lyle sales totalled £2.4 billion. For more information, please visit http://www.tateandlyle.com.
SPLENDA® is a trademark of Heartland Consumer Products LLC.