Investors cheered a sweet first half for Tate & Lyle PLC (LON:TATE) as the ingredients maker upped its full-year expectations as a strong first half confirmed its turnaround remains on track.
The group, which owns well-known brands such as Splenda and Lyle’s Golden Syrup, saw pre-tax profits jump 26% to £161mln (H1 2016: £128mln) on higher revenues of £1.40bn (H1 2016: £1.32bn).
Turnaround on track
Adjusted earnings per share came in at 27.6p, 6% above the 24.3p reported for the same period last year.
Tate & Lyle said strong sales of new products helped to drive the growth as increasingly health-conscious consumers look for alternatives to sugar.
Robust performances in its bulk ingredients (high fructose corn syrups) and speciality food ingredients businesses (Splenda, food thickeners and proteins) also helped to drive earnings higher.
READ: Tate & Lyle off to strong start to new financial year
The performance is a stark contrast to recent years: the FTSE 250 group was forced to issue a string of profit warnings back in2015 amid a sucralose (the artificial sweetener used in Splenda) price war.
As part of its turnaround strategy Tate has restructured this side of its business and worked to reduce its dependence on sucralose products.
“Good performance across the group”
“We have made a strong start to the year, with good performance across the group and higher adjusted diluted earnings per share,” said chief executive Javed Ahmed.
“Speciality Food Ingredients delivered broad-based volume growth in the core business, including North America despite market conditions in that region remaining challenging.
READ: Tate & Lyle sees full-year profits surge by 85%, underpinned by a weaker pound
“Bulk Ingredients had another period of excellent performance, well ahead of a strong comparative period, with improved overall earnings resulting from disciplined commercial execution and margin expansion.”
As Ahmed touched upon, demand for its products in North America remains sluggish – as it has done for a little while – in a “challenging” market, although Tate & Lyle did return to growth there during the half-year.
Guidance upped
“Turning to the outlook, we expect underlying adjusted profit before tax in constant currency for the full year to be modestly higher than we anticipated coming into the year driven by the strong first half performance,” Ahmed added.
Shares surged 4.1% to 688p early on Thursday.