Tate & Lyle Q1 profit ahead, sees boost from weak pound

Tate & Lyle said profit in the first quarter was ahead of the comparative period at constant currency and it expects earnings to increase strongly if the pound continues to be weak versus the dollar for the rest of the financial year.

In a trading statement for 1 April to 30 June, the company said speciality food ingredients performed solidly, with profit for the division overall ahead of the comparative period.

Excluding Splenda Sucralose, profit was slightly ahead, reflecting good margin improvement. Volume was slightly lower, however, 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, underpinned by strong volume growth from the sell-down of inventory carried into the financial year following the consolidation of the sucralose manufacturing footprint.

The bulk ingredients business performed strongly, with profit well ahead thanks to solid demand at the start of the US summer beverage season, robust US bulk sweetener margins and strong manufacturing performance. In Commodities, meanwhile, the performance was broadly in line.

Tate, which generates less than 2% of its revenues in the UK with most being US dollar-based, said its earnings would get a significant boost if sterling remains weak for the rest of the year.

At 0827 BST, Tate shares were up 0.6% to 702.83p.