Tate & Lyle on track for 2018 guidance

Tate & Lyle said on Thursday that it remains on track to deliver full-year adjusted pre-tax profit at constant currency in line with guidance.

In an update for the three months to the end of December 2017, the company said it saw volume momentum in its speciality food ingredients and bulk ingredients divisions. In speciality foods, the core business delivered good volume growth, including a continuation of modest volume growth in North America. In the food systems business, profit improved but volume was lower.

Meanwhile, Tate's Splenda Sucralose business performed as expected, with profit in line with the comparative period. The company said decisions taken in the first half, such as investment in the longer-term development of the business, will moderate profit growth in the second half.

In the bulk ingredients arm, sweetener volume in North America grew and profit growth is currently expected to be "robust" for the year ending 31 March 2018.

Shore Capital said the update contains no surprises and that volume growth across both bulk and speciality foods is encouraging.

"Overall a solid update from Tate, whose stock has been caught up by the weakening dollar trend, as well ongoing speculation around the NAFTA negotiations. We see little in today’s update to break out of such constraints for the time being, and reiterate 'hold'."

Liberum reiterated its 'buy' rating on the stock and 850p target price after the update.

"Tate is well on the path of sustained recovery and we expect improving returns, cash flow and margins, especially in speciality food ingredients. We feel fears around NAFTA are misplaced and it is becoming increasingly clear that NAFTA negotiations will likely be quite involved and protracted.

"In our view, the agreement is unlikely to have a material detrimental impact on agricultural trade with Mexico as supported by the favourable renegotiation on Mexican sugar exports to the US."

At 1050 GMT, the shares were down 4.4% to 625p.