Tate & Lyle's sweetener business with Mexico could manage some changes to NAFTA.

LONDON — Tate & Lyle, P.L.C.’s sweetener business with Mexico could manage some changes to the North American Free Trade Agreement, said Javed Ahmed, chief executive of the London-based company. Any potential tariffs could be at a manageable level, he said in giving one example.

Javed Ahmed, c.e.o. of Tate & Lyle

“NAFTA is, stating the obvious, very important to the U.S. food and agricultural sector, and particularly to the economy in the Midwest,” Mr. Ahmed said in a Feb. 9 trading statement call to discuss company results for the third quarter ended Dec. 31, 2016. “It supports millions of U.S. jobs, and talking about exports, billions, exporting billions of dollars to Canada and Mexico every year, and those exports have grown very significantly over the past 20 years or so.”

He said he expects some changes to NAFTA.

“It's way too early to know what they will be,” Mr. Ahmed said. “What is clear is there are going to be a number of variables and interactions at play here. We clearly support a free trade environment, but, for example, say if tariffs were implemented, yes, our export margins to Mexico could be reduced, but we would expect that to be at a pretty manageable level.”

If no U.S. high-fructose corn syrup flowed into Mexico at all, a number of other factors would come into play, including the flow of Mexican sugar into the United States, he said.

“So it’s very difficult for us to comment on how that would play out, but I think the industry, and you have followed it for a number of years, has a track record of taking necessary actions to adjust the changes in the sweetener supply balance,” he said.

Mr. Ahmed said commenting further would be “pure speculation territory.” He saw positives in the administration of President Donald J. Trump.

“The early indications are the new administration may create a more positive business environment through possible changes in lifting regulatory burdens, tax reforms, etc., and that, obviously, would be beneficial,” he said.

Tate & Lyle in the third quarter recorded profit in constant currency ahead of the previous year’s third quarter in both divisions. Specialty food ingredients performed in line with expectations. Profit in bulk ingredients was ahead of expectations.

Underlying volume in specialty food ingredients in the third quarter, excluding food systems and Splenda sucralose, was in line with the third quarter of the previous year.

“As in the first half, demand in North America continued to be soft with volume lower due to lower demand from some larger customers,” Mr. Ahmed said.

Data from both Information Resources, Inc. and Nielsen show the categories that Tate & Lyle supplies into are virtually in no growth mode and some are going backwards, Mr. Ahmed said. Tate & Lyle is finding success supplying smaller and mid-sized customers focused on specific categories.

“But the key here is it’s not enough yet to be able to offset some of the volume softness we’re seeing from the bigger customers,” Mr. Ahmed said.

Food systems’ performance was held back primarily by Europe. Splenda sucralose profit was ahead of the previous year’s third quarter due to the company consolidating production into a single facility in McIntosh, Ala.

Underlying volume growth was robust in Europe, Middle East and Africa, Mr. Ahmed said. Strong volume growth in Latin America largely offset weaker demand in Asia Pacific.

In the company’s bulk ingredients business, North American sweetener volume remained robust, driven by strong commercial execution, Mr. Ahmed said. The calendar 2017 bulk sweetener pricing round is expected to deliver modest margin gains in the fourth quarter.

Tate & Lyle financial results continue to benefit from currency translation, particularly from the strength of the U.S. dollar.