Tate & Lyle's prospects remain encouraging despite the poor share price, news revealed today (October 4) in its trading update for the six months to September 30, says City analyst Investec.
Tate & Lyle's long-term story remained 'compelling', said Investec analyst Martin Deboo. Corn is one of the manufacturer's main ingredients
The group's operating profit was expected to be lower than the £195M reported in the same period last year. That was mainly driven by softness in the US beverage sector, due to the cold spring and slow start to the summer. Cold weather had reduced sweetener volumes in both divisions, the company predicted.
'Patience required'
Martin Deboo, Investec analyst, said that patience was required when considering Tate & Lyle's prospects. "The long-term story remains compelling and plenty of bad news is in the price. But the path to the New Jerusalem in SFI [speciality food ingredients] is going to be longer and harder than many would have expected."
Investec retained its 'buy' recommendation on the firm's stock.
Tate & Lyle said volume growth in speciality food ingredients was expected to be in line with the wider market, strong volume growth in emerging markets and Europe, partially offset by slightly lower volumes in the US.
"We saw strong demand for our texturant and fibre ingredients, particularly in Asia Pacific and Latin America, but softness in the US beverage sector held back volume growth across our higher margin speciality sweeteners," said the firm.
