The chief executive of Tate & Lyle said the company was in a “very, very good place”, after it reported a 5pc rise in full-year profits, marking a turnaround from a calamitous few years of trading.
Chief executive Javed Ahmed said the ingredients giant, which has just completed a major overhaul, was “going into next year in good shape,” adding that the business had come out “more streamlined” following the difficult financial years of 2014 and 2015.
“I think we have had a couple of difficult years, but the transformation we are undertaking here started about five years ago,” he said.
“It was never going to be easy because of the significant amount of change that has been required. But I think having made all the structural changes that we have made over the last 12 to 15 months, it has strengthened the company both strategically and operationally.”
The group was forced into a major restructuring programme after disruption to its supply chain, a factory shutdown and a sharp fall in sucralose prices led to a string of profit warnings.
The transformation plan, which included slashing the manufacturing costs of its Splenda sucralose, expanding and investing in the higher-margin specialty food ingredients division and improving the supply chain, appears to have paid off. Adjusted pre-tax profits, which excluding exceptional costs, climbed from £184m to £193m in the year to March.
Total sales were up marginally as well, rising to £2.36bn. That was largely driven by a 4pc rise in revenues in the specialty food ingredients division to £897m, where new products, such as fibres, sweeteners and texturants, continued to sell well.
The encouraging results also follow a series of structural changes to the company’s bulk ingredients division, which manufactures basic commodities such as high fructose corn syrup. There, Tate & Lyle has “substantially reduced” its European footprint by pulling out of facilities in Bulgaria, Hungary and Turkey. It closed a facility in Singapore March and is streamlining production into a single facility in the United States, thereby lowering manufacturing costs.
“When I look to the future, I look at it with increasing confidence, because we are a leaner, more streamlined, stronger business today and we are operating in some long-term attractive markets. For us now, it is all about consistency of execution,” Mr Ahmed said.
He added that he had always been confident the business would bounce back from those difficulties.
“We have got a very clear strategy, a clean operating model and a good business model,” he said. “I am very happy to say I have got a very resilient company and a deeply committed workforce here who just took it in their stride.
“Yes, you are always concerned when you are going through that, but there was never any doubt in my mind.”
The structural changes come as part of the company’s “2020 Ambition”, which was outlined in November last year. The plan includes a target of generating $200m of sales from new products by 2020, increasing the percentage of profits from specialty food ingredients to 70pc and achieving 30pc of speciality food ingredient sales in the Asia Pacific and Latin America regions.
By Sam Dean
Source: The Telegraph
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