Sector News

Tate & Lyle to restructure European venture, Splenda unit

April 21, 2015
Food & Drink
 (Reuters) – British food ingredients maker Tate & Lyle announced a major restructuring on Tuesday, saying it would exit most of its European bulk ingredients business and make changes to its struggling Splenda sucralose unit.
 
Tate plans to exit bulk ingredients plants in Bulgaria, Turkey and Hungary, selling its stake in a European corn wet-milling joint venture to its partner Archer Daniels Midland . It will take full ownership of a more specialty-focused plant in Slovakia.
 
Specialty ingredients, such as artificial sweeteners and dietary fibres, involve special technology or patents, and therefore are much more profitable than undifferentiated bulk ingredients such as high-fructose corn syrup.
 
Tate’s strategy for some time has been to shift away from bulk ingredients, which are also vulnerable to fluctuations in commodity prices.
 
“Tate have bought an option on a brighter future,” said Jefferies analyst Martin Deboo.
 
Tate will receive 240 million euros ($256.46 million) in cash when the transaction closes, expected in the summer. After that, Tate would generate 55 percent of its profits from specialty ingredients, up from 50 percent now.
 
“The realignment strengthens our focus on specialty food ingredients and also our balance sheet,” Chief Executive Officer Javed Ahmed said.
 
Yet within specialty ingredients, Tate’s sucralose business has been hammered over the past year by competition from cheaper Chinese rivals. Profit in that business fell 75 percent to 16 million pounds in the financial year to March 2015.
 
Tate had already announced it was reviewing strategic options for the business, leading to speculation it might be sold.
 
Instead, Tate said it would aim to fix the business by focusing on customers that care about quality, safety and provenance more than price. It also plans to cut costs by closing a Singapore factory by the spring of 2016 and consolidating production at its facility in Alabama.
 
Tate predicted the sucralose business would be around breakeven in the current financial year ending in March 2016, and to return to “modest profitability” in the year ending March 2017.
 
It sees one-time net charges of around 125 million pounds ($185.76 million).
 
The company also said it would recommend an unchanged final dividend for the year ended March 2015 that would make the total for the year 28 pence per share, representing an increase of 1.4 percent. The company plans to recommend a similar dividend payment for the current year as well.
 
($1 = 0.6729 pounds) ($1 = 0.9358 euros) 
 
By Martinne Geller (Editing by Alison Williams)

comments closed

Related News

November 27, 2022

Cargill to appoint Brian Sikes as president and CEO

Food & Drink

Cargill will appoint Brian Sikes as its president and chief executive officer on 1 January 2023. The soon-to-be CEO, currently holding the chief operating officer title, has worked at Cargill for 31 years. Dave MacLennan, who has served as Cargill’s CEO since 2013, will assume the role of executive chair of the company’s board of directors.

November 27, 2022

Wellness, self-expression drive the latest trends in colors and flavors

Food & Drink

Comforting colors, feel-good flavors, and unique food and beverage experiences will resonate most with consumers in the new year, according to ADM’s latest Flavor and Color Outlook. ADM anticipates that 2023 will be the year of self-expression, and the company identified four trends that are sure to stand out.

November 27, 2022

Nespresso unveils home-compostable coffee capsules in partnership with Huhtamaki

Food & Drink

Nestlé’s Nespresso brand will pilot home-compostable coffee capsules on the Nespresso Original system in France and Switzerland from spring 2023 before further launches in several other European countries within a year. The paper-based capsules are touted as a breakthrough in packaging technology after three years of R&D.