Tate & Lyle reports solid year, completes Primient exit

23rd May 2024 10:07

(Sharecast News) - Tate & Lyle reported a robust full-year financial performance driven by strong profit and cash metrics on Wednesday, as it also announced the sale of its stake in American firm Primient.

The FTSE 250 company said adjusted EBITDA rose 7% year-on-year in the 12 months ended 31 March to £328m, with a significant increase in the EBITDA margin of 170 basis points to 19.9%.

That growth was largely attributed to proactive mix management, productivity savings, and stringent cost discipline.

Despite a slight 2% decline in overall revenue to £1.65bn, Tate & Lyle said its strategic focus on margin prioritisation over volume had paid off.

The company's food and beverage solutions segment generated £1.36bn in revenue, while Sucralose contributed £174m.

EBITDA for the segments stood at £281m and £52m, respectively.

Profit before tax increased 18% to £287m, driven by the growth in food and beverage solutions, an increased share of profit from Primient, and lower finance charges.

Additionally, earnings per share rose 18% to 55.5p, and free cash flow improved by £49m to £170m.

Tate & Lyle also announced that it had completed the sale of its remaining interest in Primient for $350m, marking its transformation into a specialty food and beverage solutions business.

The net proceeds from the sale would be returned to shareholders through a share buyback program.

It said the transaction, expected to complete by the end of July, finalised its exit from Primient ahead of schedule, significantly enhancing its cash position and enabling further shareholder returns.

The company said its strong productivity performance resulted in $41m in savings, prompting an increase in its five-year savings target to $150m.

Additionally, the company saw an improvement in its organic return on capital employed by 40 basis points.

Tate & Lyle recommended a final dividend of 12.9p per share, leading to a full-year dividend of 19.1p per share, up 3.2% from the prior year.

Looking ahead, Tate & Lyle anticipated revenue to be slightly lower in the coming year due to input cost deflation, but expected EBITDA growth of between 4% and 7%.

The company said it was poised for good volume growth in 2025 as consumer confidence improved and customer destocking ended.

"In challenging market conditions, it's been another year of robust financial performance and strategic progress, with strong profit growth and productivity delivery, excellent cash generation, and further progress to transform the business," said chief executive officer Nick Hampton.

"The actions taken over the last six years have created a higher quality and more resilient business, with the agility to navigate the challenging economic environment and softer consumer demand we saw last year.

"While managing these short-term market dynamics, we also continued to set up the business for long-term growth by increasing investment in technology, innovation, solution selling and new capacity, and by intentionally moving away from low margin business."

Hampton said he was "particularly pleased" by the firm's progress building its solutions business with customers - a core element of its strategy - with solutions new business wins continuing to grow.

"The separate announcement we made today of the sale of our remaining stake in Primient represents an important milestone for our business.

"With this sale, the transformation of Tate & Lyle into a fully-focused speciality food and beverage solutions business is complete.

"We are now well-positioned to capture the significant growth opportunities ahead as we look to provide our customers with the solutions they need to meet growing consumer demand for healthier, tastier and more sustainable food and drink."

At 0947 BST, shares in Tate & Lyle were up 4.8% at 709.49p.

Reporting by Josh White for Sharecast.com.