Tate and Lyle shares drop as it looks to year of flat earnings growth
Shares sank at Tate and Lyle this morning as the company said it expects earnings per share to remain flat or grow slowly in this financial year.
The figures
The company said today that a £43m charge on the sale of the division helped push down profits by 16 per cent to £240m in the financial year ending March.
Read more: Tate & Lyle keeps investors sweet despite flat profit
However, when removing the exceptional items, including the sale costs, a £13m restructuring charge, and a £14m gain from selling and then leasing back its railcars, adjusted pre-tax profits rose four per cent to £309m.
Sales rose two per cent to £2.76bn, net debt was down 16 per cent to £337m, while the company’s dividend rose 2.4 per cent to 29.4p.
Shares were down 4.5 per cent to 756p this morning.
Why it’s interesting
Shares took a battering today as the food company said it was expecting earnings per share to remain flat, or see low growth in the financial year ending next March.
It cited lower profits in its sucralose business and “continued market challenges” in its primary products section, which includes corn syrup.
The drop in pre-tax profits was flagged in the company’s first half results.
The company has launched what it calls a simplification programme, designed to focus efforts around the drinks, soups and dairy segments of the business. This led to a £13m exceptional charge.
Read more: Pepsico beats analyst predictions for first quarter
What Tate and Lyle said
Chief executive Nick Hampton said: “I am encouraged by our progress over the past year. The Group delivered solid financial results and we are starting to see real momentum from the three priorities I set out last year to sharpen the focus on our customers, accelerate portfolio development and simplify our business.
He added: “Primary Products did well to deliver steady volume in the face of challenging market conditions. Across the business, strong cost discipline helped offset higher than expected input costs and operational execution was excellent, particularly during the extreme cold weather in the US in early 2019.”