LONDON — Tate & Lyle, PLC in the second half of the fiscal year expects progress in line with its five-year goal with revenue reflecting both momentum and the impact of the expected pass-through of input cost deflation.
“Following this period of rapid inflation, we are now seeing cost deflation across a range of imports,” said Dawn Amanda Allen, chief financial officer, in a Nov. 9 earnings call to discuss financial results for the six-month period ended Sept. 30. “While the renewal of customer contracts for the 2024 calendar year is still in its early stages, revenue in the second half is expected to reflect the pass-through of these lower costs.”
Adjusted EBITDA in the six-month period increased 7% to £178 million ($218 million), driven by mix management, pricing, productivity and cost discipline. Adjusted revenue increased 4% to £857 million ($1.05 billion).
Within the Food and Beverage Solutions segment, adjusted revenue rose 5% to £707 million ($868 million). An increase of seven percentage points from the recovery of inflation more than offset a decrease of two percentage points from volume and price mix, Ms. Allen said.
In the Sucralose segment, adjusted revenue slipped 5% to £89 million.
“The underlying performance of this business was steady after taking into account the phasing of customer orders into the first half of last year,” Ms. Allen said. “Revenue was down 5%, reflecting the more normal phasing of orders and inflation recovery.”
London-based Tate & Lyle in the fiscal year expects revenue ahead of the prior year and EBITDA growth of 7% to 9%.
The World Health Organization recommending in May against the use of non-sugar sweeteners to control body weight or reduce the risk of non-communicable diseases apparently has had little impact on Tate & Lyle’s business.
“Frankly, we’re seeing no change in demand for our sweetening solutions, whether they be non-nutritive, artificial or natural,” said Nick Hampton, chief executive officer of Tate & Lyle, on Nov. 9. “There’s a huge, strong demand for what we do because fundamentally, all of the research out there tells us and tells consumers that sugar reduction and lower sugar products are a critically important part of, alongside a healthy lifestyle, managing weight.”
Tate & Lyle’s share of profit in Primient, a joint venture, was £17 million ($21 million), Ms. Allen said, as Primient benefited from strong commercial performance and sweetener demand alongside an improving operational performance.“This more than offset higher interest charges and a reduction in the share of profits from Primient-owned joint ventures,” she said. “We received $17 million in cash dividends from Primient in the half with a further dividend of $37 million received in early November, bringing the total year-to-date dividend to $54 million.”