LONDON — Tate & Lyle, P.L.C. achieved sales volume growth over the first half of the fiscal year in a tough North American market, one that has the London-based company raising prices.
“Our volume in North America itself was up a strong 3%, and that is despite the fact that the food and beverage market in the U.S. as a category is largely flat, and it tells you that the strategy we’ve put in place is working,” said Imran Nawaz, chief financial officer, in a Nov. 8 earnings call. “Shifting our mix toward higher-growth subcategories, shifting our mix to new channels and gaining share with our larger customers is delivering solid progress, and if you look at that progress from a categories perspective, what you see is that we are growing in a large range of our core categories: beverages, dairy, bakery, soups, sauces and dressings.”
Four days after the conference call, Tate & Lyle said that within its North American Food and Beverages Solutions business, prices are increasing between 3% and 11% for its specialty starches, fibers, oat products, specialty and high-intensity sweeteners, and stabilization and functional systems. The company, in giving a reason for the price increases, cited cost increases over the past year for materials and logistics and transportation due to truck shortages.
London-based Tate & Lyle companywide recorded sales of €1,383 million ($1,556 million) in the six-month period ended Sept. 30, which was down 1% from €1,398 million in the same time of the previous year. In constant currency exchange, sales were up 2%. Profit before tax was €166 million ($187 million), even with a year ago.
“Despite seeing greater cost inflation in North America than we anticipated at the start of the year, we took the necessary actions to manage these headwinds in the first half,” said Nick Hampton, chief executive director, in the Nov. 8 call. “As a result, our guidance for the financial year remains unchanged …”
In Food and Beverage Solutions, sales of €443 million were up 2% from €433 million. Adjusted operating profit rose 2% to €77 million from €75 million. Within the segment, sales of sucralose increased 1% to €77 million from €76 million while adjusted operating profit for sucralose dipped 4% to €27 million from €29 million. In Primary Products, sales slipped 3% to €863 million from €889 million. Adjusted operating profit was €85 million, down 8% from €93 million.
Tate & Lyle is reexamining its oats business.
“So as we’ve learned more about the oats business since we bought it back in 2012, I guess what’s increasingly clear is the value proposition for our core customer base doesn’t quite work as well as we thought it would be,” Mr. Hampton said. “It doesn’t play into the category focus that we’re focusing on, and therefore, we’ll be reappraising it and we’ll come back with a clear point of view, and that means when we finish the work.”