Shares in Tate & Lyle, the global ingredients group, soared today on the back of full- year profits up 23 per cent.
The stock climbed 32.4p to 641.40, a rise of 5.3 per cent, helped on its way by an increase in the total dividend pay-out to shareholders of 28.7p, up from 28p last time.
Profit before tax in the year to March 31 2018 was £286 million, against £233 million in the same period in 2016-2017. Earnings per share rose four per cent to 56.1p from 54.2p.
Two distinct divisions
This was achieved despite a decline in sales from £2.75 billion last time to £2.71 billion.
Net debt was cut from £452 million in 2016-2017 to £392 million.
The first is described as Tate & Lyle’s “growth engine”, researching and developing new ingredients such as texturants and sweeteners, while the second focuses on steady earnings and cash generation through the sale of bulk ingredients such as industrial starches.
Sharpening the focus
During the year, adjusted operating profit, a figure that excludes tax, interest payments, restructuring costs and other costs, rose to £192 million in speciality ingredients from £181 million last time. In bulk ingredients, adjusted operating profit rose from £129 million to £166 million.
Nick Hampton, chief executive, said: “Tate & Lyle delivered another year of progress, with good profit and cash delivery. Profit increased in all businesses, cash generation remained strong, and return on capital employed increased by 190 basis points (1.9 percentage points) to 16.2per cent.”
He added: “The group remains in a strong financial position, increasingly well-positioned to address growing consumer demand for healthier diets with less sugar, calories and fat and more fibre. To accelerate business performance and inject more pace into the organisation, we are implementing three programmes to sharpen our focus on our customers, accelerate portfolio development and to simplify the business and deliver greater productivity.”
The first of these is described as tightening Tate & Lye’s emphasis on customers and key product categories. Among this aspect of the plan is a focus on ingredients for three of these key categories: beverages; dairy products, and soups, sauces and dressings.
The second programme is to accelerate portfolio development, including speeding up the development and commercialisation of new products and developing more external partnerships “to catalyse innovation”.
The third programme is entitled “simplify, and drive productivity”. Tate & Lyle is committed to simplifying the business structure, reducing costs and increasing efficiency. It has a target of $100 million (£75 million) in productivity savings during the next four years.
Tate & Lyle said: “Underpinning our business is a reputation built over many years as a trusted supplier, with highly skilled people motivated by a strong sense of purpose to improve people’s lives by enabling healthier food choices.”