LONDON (Alliance News) - Tate & Lyle PLC said Thursday that adjusted pretax profit for the third quarter came in lower than expectations, as volume and sales growth in its SPLENDA Sucraclose sweetner were in line with first-half levels and its expectations, ahead of impending price declines.
Shares in the British-based multinational agribusiness have plummeted in morning trading after it said in its interim management statement for the three months to December 31 2013 that adjusted profit before tax was lower than its expectations and that it now expects profits for the year to March 31 2014 to be broadly in line with last year.
Tate & Lyle said that despite steady sales and growth in the SPLENDA Sucraclose product, it anticipates the rate of price decline in the product to increase in the final quarter, with prices expected in the 2015 financial year to come in around 15% lower than the current year, driven by current market dynamics and its latest figures, said the company, noting however, "We continue to see good long-term opportunities for growth in the market for SPLENDA Sucralose leading to operational efficiencies as we continue to fill our McIntosh facility."
The food producer said net debt at the end of the quarter was GBP253 million, down from GBP336 million at September 30 2013. The company said, "While the recent bumper harvest in the US has eased pressure on corn stocks, we continue to maintain prudent levels of corn within our silos for security of supply. Based on current corn prices and exchange rates, we expect the payment for new crop corn held in our silos to result in a net cash outflow in the final quarter."
Tate & Lyle also announced the latest phase of its 30-year Sucralose partnership with McNeil Nutritionals through the establishment of a renewed SPLENDA Alliance. The focus for the renewed partnership will be the development and growth of the global market for Sucralose and the SPLENDA Brand. The companies will partner on the continued development and promotion of the SPLENDA Brand and Sucralose, including ingredient and brand protection initiatives, said the firm.
Overall, the firm said it continues to be pleased with the progress it is making after its "solid start" to the final quarter, and particularly with the underlying strength of its Speciality Food Ingredients business, noting that excluding the headline SPLENDA sweetner, it expects to see profit growth in all product categories across Speciality Food Ingredients.
A note from analyst firm Berenberg called the release, "a frustrating statement, due to SFI volumes and sucralose pricing, very much at odds with previous communication. A lot more colour in needed from management... especially as to what has really changed since H1 guidance."
Shares in the company were trading down 17.16% at 651.97 pence per share Thursday, leading the FTSE 100 fallers in morning trading.
By Alice Attwood; aliceattwood@alliancenews.com; @AliceAtAlliance
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