Tate & Lyle maintains forecast following profit warnings

01-Apr-2015 - Last updated on 02-Apr-2015 at 11:07 GMT

After three profit warnings in a year, there were no further surprises for investors this morning, as the company stuck to its February forecast for its full year results

Tate & Lyle said there was no change to its full year guidance in a trading update on Thursday morning.

The company said it expected profits for the year to be “modestly below” the range it gave in September 2014, of £230m to £245m (€315m to €335m), reiterating its position from February. At that time, it had issued its third profit warning in a year, as competition from sucralose suppliers in China had undercut its prices, and the company struggled with falling oil and sugar prices. The September forecast was itself a downward revision of an earlier full year profit forecast of £322m (€440m).

In a conference call with investors on Thursday morning, CEO Javed Ahmed referred to the company’s decision to increase the list price for sucralose by 20% last month.

“We will only compete in this business in the areas we see value,” he said, adding that the company was “taking a disciplined approach to value”.

The company said in a statement: “As planned, the project to evaluate how best to maximise returns from Splenda sucralose is reaching conclusion and will be finalised with the Board during April. We expect to communicate the outcome in the next few weeks.”

Tate & Lyle’s share price was up nearly 3% by 10am BST Thursday morning to 624 pence. It hit a low of 558 pence in early February.

Allulose

Ahmed also said the company’s new allulose sweetener, sold under the brand name Dolcia Prima, was doing well.

“It has all the functionality of sugar with 90% less calories and that’s obviously attracted strong interest, as you can imagine,” he said. “…It takes a little while to get traction when it comes to commercialisation of products.”

The sweetener has 70% of the sweetness of sugar and is found naturally in jackfruit and raisins, but is being made in commercial quantities via the enzymatic conversion of corn using a proprietary process.It has GRAS (generally recognised as safe) status in the US, but is not currently permitted for use in Europe.

Ahmed said the company would leave it to its customers as to whether the ingredient should be marketed as ‘natural’, and added: “It’s going to be targeted at calorie reduction and sugar replacement.”