Tate & Lyle meeting profit targets despite 4% US soft drink slide

23-Jul-2013 - Last updated on 24-Jul-2013 at 15:43 GMT

Related tags Soft drink

T&L CEO Javed Ahmed: “The difference in the business today is if the US had anaemic growth we would not have been able to address that.”

Tate & Lyle CEO Javed Ahmed says earning and profit forecasts are intact – “mid single digit growth” – despite an unseasonably cold spring that has contributed to an annual drop of 4% in the US soft drinks market and hit its specialty and bulk sweeteners business.

“Consumption on the beverages side was low …primarily in US beverages we saw some volume softness for the quarter,” Ahmed said as the company delivered its Interim Management Statement.

He said in the past such a situation would have forced the company to revise its forecasts but increasing business in emerging markets meant it could take such impacts to its varying business units.

“The difference in the business today is if the US had anaemic growth we would not have been able to address that.”

The company said growth had been strong in its Speciality Food Ingredients division which includes flavours, sweeteners and nutritive ingredients and its Bulk Ingredients division that includes bulk sweeteners, industrial starches and fermentation products (primarily acidulants).

It bolstered its nutritive ingredients portfolio in May when it purchased the EU-approved cholesterol managing, oat beta-glucan business, Biovelop.

M&A

Chief financial officer Tim Lodge said the company was building its presence in China which had been boosted by the 51% investment in the food systems firm Jiangsu Howbetter Food this month, although the deal is subject to government approval.

“This gives us access to a customer base quicker than we could have grown it ourselves organically,” he said.

“We saw an attractive asset and it was a nice acquisition in food systems. There is no formula for further acquisitions but if an asset can deliver a long term platform for further growth then regardless of size, we will go for it.”

The ingredients businesses were also showing growth in China, he said.

While it eyes further buys the company divested from the “legacy” Chinese monosodium glutamate business that brought it a one-off profit boost of £3.5 million (€4.06m).

The company said net debt had been reduced from £479m (€555m) to £426 (€494m), with a majority of investment analysts continuing to recommend buying stock in the €4bn-rated company.