Inflation sours upside for Tate & Lyle split

Corbion NV

10/08/2021 10:42

(The author is a Reuters Breakingviews columnist.  The opinions
expressed are their own.)
    LONDON, Aug 10 (Reuters Breakingviews) - The ingredients in
ingredients are becoming pricier. On Tuesday, Dutch flavourings
and preservatives maker Corbion’s  CORB.AS  shares fell as much
as 9% after higher prices for freight and raw materials forced
it to downgrade its 2021 EBITDA margin target http://www.corbion.com/media/press-releases?newsId=2571567
 from over 15% this year so far to as little as 13%.  
    The slump may have a read-across for British rival Tate &
Lyle  TATE.L , which last month sold a controlling stake in
its sweeteners business to private equity  urn:newsml:reuters.com:*:nL8N2OO1NY, leaving
it, like Corbion, as a pure-play seller of ingredients that make
food tastier and longer-lasting. Corbion’s shares have more than
tripled since it pulled off a similar split in 2012.   
    The Dutch group’s stock was arguably a little rich. Before
Tuesday’s decline, the group had been trading at a toppy 30
times 2022 earnings. The multiple has now fallen to 27 times.
Tate & Lyle, however, still looks cheap, valued at just 13 times
forward earnings. Its shareholders still have plenty to gain
from the separation, but Chief Executive Nick Hampton may have
to work a little harder. (By Dasha Afanasieva)  

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 (Editing by Neil Unmack and Oliver Taslic)
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