Tate & Lyle profit set to rise ahead of CP Kelco takeover
Tate & Lyle’s operating profit is expected to have jumped four per cent over the last financial year, even as revenue dropped five per cent, the firm said in a trading update today.
The FTSE 250 sweetener producer said performance had been in line with expectations in its business over the last year, with cash conversion exceeding 75 per cent.
Meanwhile, net debt to operating profit is expected to come in at 2.2 times in its full-year results, better than had been anticipated by the firm.
Last year, the firm spent $1.8bn (£1.4bn) on pectin and gums business CP Kelco, taking control of its three divisions in the US, China and Denmark.
It said the buyout would position it as a “leader in mouthfeel, a critical driver of customer solutions” and strengthen its expertise across its three core platforms of sweetening, mouthfeel and fortification.
Today, Tate & Lyle said CP Kelco was continuing to trade well, with an expected increased operating profit margin of 0.9 per cent for the full year to the end of March.
The two companies have operated as one combined business since 1 April, with expected synergy savings of $50m by the end of the next financial year.
“Notwithstanding the uncertain macroeconomic environment, we are confident in the medium-term growth potential of the business we have created and are focused on delivering the benefits of the combination with CP Kelco and accelerating topline growth,” said Tate & Lyle chief executive Nick Hampton.
“Our confidence in the growth opportunity ahead has been strengthened by the positive engagement we are seeing from customers in both our expanded portfolio and capabilities.”
In October, rumours swirled that Tate & Lyle was set to be taken over by American private equity group Advent International, sending its share price up 12 per cent in a single day.
The firm is due to announce its full-year results on 22 May.