Shares in food producer Tate & Lyle (TATE) ticked up 8% to 744.2p on Friday after the international sweeteners specialist reported a near-20% surge in core business revenues for the third quarter to December 2021.
The FTSE 250 firm assured the market it remains on track to split into two businesses by the end of March 2022 and said that the current year performance of the continuing business is now expected to be stronger with pre-tax profit set to grow ‘in the low double-digit percent range’.
PALATE-PLEASING PROGRESS
One of Shares’ key selections for 2022, Tate & Lyle’s sale of a controlling stake in its North American Primary Products business will create a higher quality, ‘new’ Tate & Lyle with superior growth prospects.
Once the sale completes, Tate & Lyle intends to return around £500 million to shareholders by way of a special dividend with an associated share consolidation.
The core business going forward is its specialty ingredients arm, Food & Beverage Solutions, which produces sweeteners, texturisers, fibres and stabilisers for beverages and dairy products, soups, sauces and dressings.
In today’s sweet update, CEO Nick Hampton insisted Food & Beverage Solutions delivered ‘another excellent quarter’ in the period to December, with ‘double-digit revenue growth across all regions and continued high demand for New Products from our innovation pipeline’.
Building on the positive momentum seen in the first half, Food & Beverage Solutions’ sales grew by 19% thanks to higher volumes, price increases and a boost from acquisitions.
Tate & Lyle said North America and Europe each delivered double-digit revenue growth, while sales growth in Asia, Middle East, Africa and Latin America ‘accelerated strongly in the quarter helped by robust growth in China, South-East Asia and Mexico’.
SWEET POTENTIAL
Hampton sounded upbeat about Tate & Lyle’s positioning as it enters 2022. ‘Our new business pipeline in Food & Beverage Solutions is healthy and in both our businesses we have renewed 2022 calendar year customer contracts that offset inflation’, he explained.
‘With Tate & Lyle re-positioned as a growth-focused, global food and beverage solutions business serving faster growing markets, we see significant opportunities ahead.’
The trends driving Food & Beverage Solutions’ growth should continue, principally consumers’ demand for healthier foods and drinks that are lower in sugar and calories, with cleaner labels and added fibre.
