LONDON — Weaker demand in North American sweeteners led to lower volume in Tate & Lyle P.L.C.’s Primary Products segment in the third quarter ended Dec. 31, 2018. Adjusted operating profit in Primary Products was lower than in the previous year’s third quarter.
Nick Hampton, chief executive, brought up soft drink prices in a Feb. 7 trading statement call.
“I mean, what we clearly saw in the third quarter was an acceleration of pricing in carbonated soft drinks as the big players looked to recover some cost inflation,” he said. “We'll see how that evolves over the next few months. I mean, we've seen a consistent decline in demand for full-sugar carbonated soft drinks over time. It did accelerate in the third quarter. It's a bit early to tell whether that's going to continue.”
Tate & Lyle’s bulk sweetener pricing round for the 2019 calendar year is nearing completion.
“We're broadly in line from a margin perspective,” Mr. Hampton said. “What that really means is, through the pricing round, we've managed to price through cost inflation. We're seeing volume contracts to be broadly similar to the prior year, and I think the question for us, going to the next calendar year, is how the volumes evolve. So, yes, we saw a little bit of softness in quarter three. We're happy with where we ended up on the pricing round for calendar 2019.”
Despite the weaker demand for North American sweeteners, Tate & Lyle still expects earnings per share in constant currency over the fiscal year to be in a mid-single-digit range. It should be in the low end of the range, partly because of energy and transportation cost inflation in North America.
In the company’s Food & Beverage Solutions segment, adjusted operating profit in the third quarter was higher than in the comparative period. Volume growth continued in North America, Asia Pacific and Latin America. A focus on mix improvement continued in Europe, the Middle East and Africa.
In the Sucralose segment, volume benefited from a program to optimize production at a facility in McIntosh, Ala. Adjusted operating profit in Sucralose finished ahead of the adjusted operating profit in the comparative period.