Energy, transport costs weigh on Tate & Lyle guidance
Reuters
Published Feb 07, 2019 09:34
Energy, transport costs weigh on Tate & Lyle guidance
(Reuters) - British food ingredients maker Tate & Lyle (LON:TATE) said on Thursday full-year earnings growth was likely to be at the lower end of its forecast, hurt by higher energy and transportation costs in its key North American market.
Shares of the company fell almost 2 percent in early trade.
The company, which sells corn syrup and other ingredients to food and drink makers, was forced to raise prices for some of its products recently to offset higher costs related to materials and logistics, and transportation due to substantial truck shortages.
Tate & Lyle, which has been looking to simplify its business and speed up development of its new products, had previously forecast full-year earnings to grow by "mid-single digit" on a percentage basis.
The FTSE-250 company said quarterly pretax profit in constant currency was ahead of last year boosted by volume growth in its food & beverage solutions division and its business that sells sucralose, a low-calorie sweetener.
Volume in sucralose was higher due to an optimisation programme at its facility in Alabama with adjusted operating profit slightly ahead of the comparative period, Tate & Lyle said.
In recent years, Tate has been focussing more on speciality food ingredients such as artificial sweeteners and other products like starch, which carry higher margins than its much larger and more commoditised business of bulk ingredients.
"The market underestimates the scope of Tate's margin potential, which could drive strong upside risk to both earnings and the share price," said Liberum analysts.
Get The App
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.