Sweeteners giant Tate and Lyle said that adjusted operating profits in the first quarter were in line with its expectations, but did sound a cautious note in the full-year outlook as corn prices have surged.
In Speciality Food Ingredients, volumes and sales increased year-on-year in the three months to June 30th, with solid growth in the US and emerging markets offset by weakness in Europe.
With difficult market conditions in Europe denting sucralose volumes, together with the impact of the strike at its joint-venture plant in Turkey, operating profits in the division was lower than expectations.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
In contrast, operating profits in Bulk Ingredients were slightly above expectations.
"Overall, we continue to expect to make progress this financial year while recognising the current level of uncertainty surrounding the wider economy and volatile corn markets," the firm said.
Corn prices in the US which have increased significantly since mid-June due to the ongoing drought in the mid-west, as well as continued dry and hot conditions in central Europe. There are now concerns about what impact this will have on this year's harvest and corn supplies.
"It is not clear how the current volatility in the corn price and markets that drive co-product demand and pricing will impact the business over the remainder of the year. As in previous years, we will continue our strategy of maintaining full corn silos in the US to secure supply against the backdrop of tight market conditions," Tate & Lyle said.
Meanwhile, net debt was reduced from £476m to £373m during the period. The group redeemed the outstanding £100m bonds from its own funds.
Shares were down 1.24% at 636p in early trading on Thursday.
BC
