Adjusted profit before tax was up 5% for the year ended March 31, while sales grew by 0.6% to £236bn.
However, on a constant currency basis – where the effects of exchange rate fluctuations are eliminated – adjusted profit before tax was up 1%, and sales fell 3%. Tate & Lyle said the fluctuation reflected the “pass through of lower corn prices”.
Taking into account realignment measures and litigation costs, pre-tax profits fell almost 14% to £193M. Actual pre-tax profits increased from £51M to £126M.
Structural changes initiated included making the Splenda sucralose business “more focused, low cost and sustainable”.
Eaststarch European joint venture
There has also been a realignment of Tate & Lyle’s Eaststarch European joint venture with Archers Daniels Midland (ADM), to increase its speciality focus and reduce exposure to regulated markets.
Sales for the Speciality Foods Ingredients division were up 4%, to £897M (2% in constant currency), while adjusted operating profit was up 10% (5% in constant currency). This followed good growth in a number of emerging markets.
Bulk ingredients sales fell by 1% to £1,458M (down 6% in constant currency). However, Tate & Lyle said margins improved significantly as US corn wet milling industry dynamics remained well-balanced, and there were also manufacturing efficiency improvements.
This strength in the core business largely offset the performance of commodities, which deteriorated sharply in the face of extremely challenging market conditions, especially in US ethanol.
At a glance
- Adjusted profit before tax up 5%
- Pre-tax profits up from £51M to £126M
- Sales up 0.6% to £236bn
- Speciality Foods Ingredients sales up 4% to £897M
- Bulk ingredients sales down 1% to £1,458M
‘Innovation pipeline’ growth
Sales of new products launched from the company’s ‘innovation pipeline’ grew strongly, up 34% in constant currency.
Overall, the balance sheet strengthened, with net debt reduced by £121M to £434M.
Return on capital employed was down to 11.3%, reflecting the Eaststarch realignment and capital expenditure. Adjusted diluted earnings per share was up 2.5p (8%) at 34.5p.
The final share dividend proposed stood at 19.8p, making an unchanged total dividend of 28p, as previously indicated.
Chief executive Javed Ahmed said: “The Group made solid progress during the year, delivering improved earnings. A number of major structural change initiatives were also completed to further strengthen the business, drive higher quality earnings, and position the Group for long-term growth.
“During the year, we successfully completed a number of major structural change initiatives including the re-alignment of the Eaststarch joint venture in Europe, the restructuring of the Splenda sucralose business, and the expansion of capacity for Speciality Food Ingredients. Taken together, these initiatives further re-shape and significantly strengthen the business in support of our 2020 Ambition.”