Tate + Lyle: Announces Results For The First Half

London / UK. (tl) Tate + Lyle PLC, a leading global provider of speciality food ingredients and solutions, announced the following statement for the six months ended 30 September 2016. Chief Executive Javed Ahmed: «We have made a strong start to the year delivering good profit growth in both divisions supported by good US bulk sweetener demand in the key summer beverage season, and the benefit of the one-off sell-down of excess inventory in Sucralose. We continued to strengthen execution across the business, leading to further improvement in customer service and supply chain performance.

«Speciality Food Ingredients performed well and consistent with our 2020 Ambitions, delivering double digit profit growth in the core business. All regions delivered solid volume performance other than North America where volume was held back by lower demand. Sales from New Products continued to gain good traction.

«Bulk Ingredients performed particularly well, driven by solid demand, robust margins and strong manufacturing performance. We are continuing to actively position core Bulk Ingredients to deliver steadier earnings over the longer term, with an increasing focus on customer service, cost control and continuous manufacturing improvement.

«Turning to the outlook, we expect adjusted profit before tax in constant currency for the full year to be higher than we anticipated coming into the year driven by the strong first half performance, with performance in the second half remaining in line with our expectations».

Key Headlines

• 22 percent1 increase in Group adjusted profit before tax driven by strong performance in both divisions
• 12 percent1 increase in Speciality Food Ingredients adjusted operating profit:
  • Good growth in core business
  • 15 million GBP increase in Sucralose supported by one-off inventory sell-down
  • 6 million GBP decrease in Food Systems driven by lower volume in Europe
• 18 percent increase in sales from New Products to 51 million USD
• 36 percent1 increase in Bulk Ingredients adjusted operating profit driven by solid demand, robust margins and strong manufacturing performance
• Currency translation increased adjusted profit before tax by 15 million GBP with estimated2 full year impact of around 40 million GBP
• 58 million GBP increase in profit before tax to 128 million GBP with improved operating performance and lower exceptional costs
• Adjusted free cash flow increased from 92 million GBP to 138 million GBP
• Interim dividend maintained at 8.2 pence per share to continue to build dividend cover

Financial Highlights

• First half performance benefited from good growth in core Speciality Food Ingredients, the benefit of the one-off sell-down of excess inventory in Sucralose, and good US bulk sweetener demand in the key summer beverage season.
• Adjusted diluted earnings per share (continuing operations) were up 34 percent (19 percent in constant currency) at 24.3p (2015 – 18.1p) with 3.4p of growth driven by underlying performance and 2.8p by currency translation. Statutory diluted earnings per share (continuing operations) were 27.4p (2015 – 14.3p).
• Currency translation increased adjusted profit before tax by 15 million GBP.
• Volume in both divisions benefited from the acquisition of 100 percent of the Slovakian facility in the second half of the 2016 financial year.
• The adjusted effective tax rate for continuing operations in the first half was 18.3 percent (2015 – 17.9 percent). We expect the adjusted effective tax rate for the full year to be around 18 percent, rising to slightly above 20 percent in the next financial year.
• Following the recent changes in UK tax legislation, the reported effective tax rate was a credit of 0.9 percent (2015 – charge of 4.5 percent) reflecting the recognition of a 26 million GBP deferred tax asset as an exceptional credit.
• Adjusted free cash flow increased to 138 million GBP benefiting from higher earnings, lower capital expenditure and currency translation. Improvements in working capital management generated an inflow of 62 million GBP in the period, an improvement of 9 million GBP.
• Net debt was 16 million GBP lower at 418 million GBP despite 44 million GBP adverse impact of foreign exchange translation.