Tate & Lyle dairy
Tate & Lyle has expertise in such segments as health and nutrition and dairy.

LONDON — Even though it was 1%, North American volume growth in the specialty food ingredients business in the first half of the fiscal year encouraged executives of Tate & Lyle, P.L.C. Market conditions in such a mature food and beverage market can make achieving any growth difficult.

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

“Fundamentally, it’s a challenged market,” said Javed Ahmed, chief executive officer and executive director, in a Nov. 2 earnings call. “You’ve seen the numbers. If I look at the food and beverage sector in North America, there’s very little growth there. There are pockets of growth, but overall the market is flat at best.”

Tate & Lyle sales in North America within its specialty food ingredients business reached £180 million ($235 million) in the six months ended Sept. 30, which marked a 4% increase from £175 million during the same time of the previous year. London-based Tate & Lyle outperformed a challenging North American food and beverage sector over the six-month period, Mr. Ahmed said.

He said the company focuses on three main areas in North America.

“The first is to grow our share with larger customers,” he said. “A number of these customers are finding it challenging to deliver volume growth in light of evolving consumer trends. In these circumstances, innovation and our ability to provide solutions to reduce sugar, calories and fat and fiber are increasingly important. As a result, while we have seen softness in some areas, a combination of a highly relevant product portfolio and our technical expertise has helped us to grow our share with larger customers in the first half.”

The second area is expanding the company’s presence in faster-growing customer channels such as private label and food service, he said.

“The third is to focus on those higher growth sub-categories, which play well into our expertise in sugar and calorie reduction and fiber enrichment, such as the health and nutrition, dairy, and bakery categories,” Mr. Ahmed said.

He added, “As our business mix shifts over time, clearly, structurally, the business becomes much more of a growth business. It’s going to be a gradual process, but I’m actually very pleased to be able to have modest growth given where we’ve been with this business, and it’s on a good trajectory at the moment.”

Companywide, Tate & Lyle recorded adjusted operating profit of £170 million ($222 million), up 28% from £133 million in the six-month period of the previous year. Six-month sales increased 6% to £1,398 million ($1,826 million) from £1,321 million.

Within specialty food ingredients, adjusted operating profit of £104 million was up 10% from £94 million. Six-month sales grew 5% to £509 million from £487 million. Volume growth was 3%.

Splenda sucralose sales slipped 9% to £76 million while volume was down 17%. Tate & Lyle expected a decrease, which reflected the sale of excess inventory in the comparative 2016 period following a transition to a single manufacturing facility in McIntosh, Ala. Adjusted operating profit for Splenda sucralose increased 5% to £29 million supported by firm pricing and lower manufacturing costs driven by fully sourcing product from the McIntosh facility.

Sales of new products increased 14% to £45 million, and volume grew by 23%.

“Our sweetener and texturants platforms performed particularly well,” Mr. Ahmed said. “Sales of our stevia and monk fruit sweeteners grew strongly, especially in Asia. We also saw good demand in North America for our line of Claria functional clean label starches and our recently launched range of non-G.M.O. starches.

“We have seen a high level of customer interest and interaction in our expanded stevia-based product offering following our partnership with Sweet Green Fields. Overall, the pipeline remains strong, and new products will continue to be a key driver of longer term growth.”

Within Tate & Lyle’s bulk ingredients business, adjusted operating profit jumped 45% in the six-month period to £93 million from £64 million. Six-month sales increased 6% to £889 million from £834 million. Volume increased 2% driven by North American sweetener growth. Tate & Lyle said the U.S. corn wet milling industry remains relatively well balanced, reflecting firm overall demand and stable industry exports to Mexico, where demand for regular carbonated soft drinks remained firm.