REG-Tate & Lyle PLC Trading Statement <Origin Href="QuoteRef">TATE.L</Origin>

Tate & LyleAnnouncement

24/11/2014 14:16

http://pdf.reuters.com/htmlnews/8knews.asp?i=43059c3bf0e37541&u=urn:newsml:reuters.com:20140923:nBw226605a 
 
LONDON--(Business Wire)--


23 September 2014 - Tate & Lyle PLC

TRADING UPDATE

Tate & Lyle issues the following trading update for the six months ended 30
September 2014 ahead of the announcement of Half Year Results on Thursday 6
November 2014. 

GROUP OPERATING PERFORMANCE

The first half of the year has been very challenging as we faced significant
disruption to our supply chain and an increasingly competitive market for
SPLENDA® Sucralose1. 

Supply Chain

As stated in our Interim Management Statement in July (July IMS), supply
constraints arising from the prolonged and severe winter in the US caused
operational difficulties in our US corn plants and led to us entering the
financial year with much lower inventories than usual, leading to a reduction in
first quarter profits of around £10 million. Our supply chain was also affected
by the extended shutdown in the first quarter of the SPLENDA® Sucralose facility
in Singapore. 

However, the disruption to our global supply chain persisted longer than we
anticipated, caused by challenges in our plant network, low absolute levels of
inventory and misalignments between customer demand and inventory availability
(particularly from the emerging markets). As a result, we expect to incur
additional non-recurring costs in the second quarter of around £20 million,
taking the total costs for the first half to around £40 million. 

While inventories are now being re-built and our global supply chain is
progressively returning to normal, we anticipate further non-recurring costs of
around £10 million in the second half of the financial year. 

SPLENDA® Sucralose

Volume for SPLENDA® Sucralose in the first half is expected to be ahead of the
comparative period, but lower than anticipated at the time of July IMS, caused
by a combination of supply constraints and our decision not to compete for
certain volumes where we did not see value. The global market for sucralose
continues to be extremely competitive. We now expect the average level of price
erosion in the first half to be higher than we previously anticipated, and in
the 2015 financial year to be around 25% compared with our previous guidance of
15% as communicated in February 2014. 

Speciality Food Ingredients (ex-SPLENDA® Sucralose)

Excluding SPLENDA® Sucralose, Speciality Food Ingredients continues to perform
well, albeit overall volume growth in the first half has been held back by
supply constraints. We expect to deliver double digit volume growth in the
emerging markets, and also good volume growth in Food Systems and in Europe.
North American volume, however, is expected to be lower than the comparative
period due to supply constraints. 

1 SPLENDA® is a trademark of McNeil Nutritionals, LLC. 

Bulk Ingredients

Bulk Ingredients performed solidly in the second quarter and our expectations
for the first half remain broadly unchanged. The performance of this division is
expected to be lower at constant currency than the comparative period, largely
as a result of the impact of the severe and prolonged winter in the first
quarter. 

STRATEGIC PROGRESS

On 1 August 2014, we completed the acquisition of Winway Biotechnology Nantong
Co. Ltd, a leading producer of polydextrose dietary fibre in China. This
acquisition provides an excellent platform from which to accelerate the growth
of our speciality fibres business in Asia Pacific. 

Our innovation pipeline remains robust and we are preparing to launch two
exciting new products in the next few weeks. We are also actively pursuing a
number of other initiatives to accelerate the delivery of our speciality food
ingredients-focused strategy. 

In August, we successfully implemented our global IS/IT platform in our North
American business and in Singapore, and are now focused on fully embedding the
new processes and systems. 

FIRST HALF PERFORMANCE AND OUTLOOK FOR THE FULL YEAR

Despite continuing good demand across Speciality Food Ingredients and a solid
performance in Bulk Ingredients, significant operational and supply chain issues
together with a lower SPLENDA® Sucralose performance, now leads us to expect
Group adjusted profit before tax2 for the first half to be in the range of £95
million to £105 million. 

For the second half, we expect Speciality Food Ingredients excluding SPLENDA®
Sucralose and Bulk Ingredients to continue to perform solidly, but this will be
more than offset by a softer performance in SPLENDA® Sucralose and additional
supply chain costs. This, together with the first half performance, now leads us
to expect Group adjusted profit before tax2, 3 for the full year to be in the
range of £230 million to £245 million. 

As usual, performance in the final quarter of the financial year will be
influenced by the outcome of the calendar year pricing round, and also assumes
normal weather patterns. 

JAVED AHMED, CHIEF EXECUTIVE, SAID:

"The Group`s performance in the first half has been extremely disappointing as
we have faced significant manufacturing and supply chain challenges, and intense
competition in SPLENDA® Sucralose. I have instigated an immediate review of our
planning and supply chain processes, led by our Chief Financial Officer, to
ensure they fully reflect the needs of the business going forward. Despite
current operational challenges, I continue to be encouraged by our robust
innovation pipeline, the strength of the Speciality Food Ingredients business
excluding SPLENDA® Sucralose, and continued growth in emerging markets. We
remain firmly focused on taking the necessary actions to improve the Group`s
performance and to deliver on our strategy." 

2 Before exceptional items and amortization of acquired intangible assets 

3 Based on forecast foreign exchange rates of USD:GBP $1/£1.69 

END

A conference call will be held today at 8:00am BST, hosted by Javed Ahmed, Chief
Executive who will be accompanied by Nick Hampton, Chief Financial Officer and
Christopher Marsh, Investor Relations. Participants are requested to dial in at
least 10 minutes before the commencement of the call. 

Dial in details are as follows: 

Standard International Access: +44 (0) 20 3003 2666
Password: Tate & Lyle
UK replay number: +44 (0) 20 8196 1998
International reply numbers:
http://www.meetingzone.com/en-GB/replaydialinnumbers.aspx
Replay Access PIN: 8910837 

A replay of this call will be available after the end of the live call for 14
days until 7 October 2014. 

For more information contact Tate & Lyle PLC:
Christopher Marsh, Group VP, Investor and Media Relations
Tel: +44 (0) 20 7257 2110 or Mobile: +44 (0) 7796 192 688 

Andrew Lorenz (FTI Consulting), Media Relations
Tel: +44 (0) 20 7269 7113 or Mobile: +44 (0) 7775 641 807 

About Tate & Lyle:

Tate & Lyle is a global provider of ingredients and solutions to the food,
beverage and other industries, with operations in over 30 locations worldwide. 

Tate & Lyle operates through two global divisions, Speciality Food Ingredients
and Bulk Ingredients, supported by our Innovation and Commercial Development
group. The Group's strategy is to become a leading global provider of Speciality
Food Ingredients through a disciplined focus on growth, and by driving Bulk
Ingredients for sustained cash generation to fuel this growth. 

Speciality Food Ingredients consists of three platforms: Texturants, which
includes speciality starches and stabilisers; Sweeteners, which comprises
nutritive sweeteners and our range of no-calorie sweeteners including SPLENDA
Sucralose; and our Health and Wellness portfolio which includes speciality
fibres and our salt-reduction offering. Additionally, our Food Systems business
provides a wide variety of blended ingredient solutions. 

Tate & Lyle Bulk Ingredients includes bulk sweeteners, industrial starches and
fermentation products (primarily acidulants). Corn co-products from both
divisions are primarily sold as animal feed. 

Tate & Lyle is listed on the London Stock Exchange under the symbol TATE.L.
American Depositary Receipts trade under TATYY. In the year to 31 March 2014,
Tate & Lyle sales totalled £3.1 billion. http://www.tateandlyle.com. 

SPLENDA® is a trademark of McNeil Nutritionals, LLC. 
 
Tate & Lyle PLC 

Copyright Business Wire 2014