Tate & Lyle warns on profits after bad US weather
Sweetener maker Tate & Lyle blamed severe US weather and the temporary shutdown of a plant in Singapore for higher costs and a profit warning, although it said sales of its flagship Splenda sucralose sweetener were ahead of last year.
Tate & Lyle
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16:35 09/05/24
Tate & Lyle said the first half of the year had been very challenging as it faced significant disruption to its supply chain and an increasingly competitive market for Splenda.
Supply constraints arising from the prolonged and severe winter in the US caused operational difficulties in Tate's US corn plants and led to it entering the financial year with much lower stocks than usual, leading to a reduction in first quarter profits of around £10m.
The supply chain was also affected by the extended shutdown in the first quarter of the Splenda sucralose plant in Singapore.
Disruption lasted longer than expected and the group expects extra one-off costs in the second quarter of about £20m, taking total first half costs to about £40m.
"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 £10m in the second half of the financial year," Tate said in a statement.
Splenda sucralose volumes in the first half are expected to be ahead of the same period last year, but lower than expected in July, caused by supply constraints and a decision not to compete for certain volumes where the group failed to see any value.
Despite good or solid performances in speciality and bulk ingredients, the group now expects adjusted profit before tax for the first half to be in the range of £95m to £105m. Full-year adjusted pre-tax profit is set to be in the range of £230m to £245m.
Chief executive Javed Ahmed called the first half disappointing, adding: "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."