Annual sales and profits rose at sucralose and ingredients supplier Tate & Lyle last year as it continues to trade strongly through the coronavirus crisis, albeit with a more mixed April.
Announcing its results for the year to 31 March 2020, Tate & Lyle said adjusted revenues were up 2% last year to £2.9bn while adjusted pre-tax profits rose 4% to £331m.
The performance was driven by its food & beverage solutions, which delivered strong revenue and double-digit profit growth.
The division saw volume rise 1% while revenue increased by 5% in constant currency to £942m from “good price and mix management” as well as the impact of passing through higher net corn costs.
Meanwhile, sucralose volume and revenue in constant currency decreased by 4% reflecting the impact of the prior year programme to optimise inventory.
Primary products volumes were 2% lower with North American sweetener volume 2% lower and North American industrial starch volume 8% lower.
CEO Nick Hampton said: “This has been another year of consistent delivery. We made good progress executing our strategy with strong revenue and profit growth from Food & Beverage Solutions and profit growth from Primary Products in more challenging markets.
“Food & Beverage Solutions delivered revenue growth in each region with revenue from New Products 15% higher. Operational execution was excellent and our three priorities to ‘Sharpen, Accelerate and Simplify’ the business continued to support performance. Customer focus was sharper, our innovation delivered strong growth and we delivered productivity ahead of target. Our culture is enabling us to move with greater pace and agility and we entered the new financial year with real momentum.”
Tate & Lyle previously stated the coronavirus had had a limited impact on its trading, although the locckdowns in many countries led to “significant changes in demand patterns”.
It said this morning that Food & Beverage Solutions and Sucralose continued to perform well with volume for Food & Beverage Solutions in line with the comparative period and Sucralose 18% higher due to phasing of customer orders.
However, Primary Products volume was significantly impacted by the first full month of lockdown in the US. Bulk sweetener volume was 26% lower from reduced out-of-home consumption as bars, cinemas, restaurants and sporting events were either shut or cancelled.
Tate & Lyle has taken action to reduce costs, such as stopping discretionary spend, freezing salary increases and halting recruitment of all but essential staff.
Hampton added: “Throughout the pandemic, we have continued to work very closely with our customers and support them as they have adapted to a rapidly changing operating environment.
“At the start of our 2021 financial year, with lockdowns in the US and Europe, trading in April was mixed. As the length and extent of the pandemic remains uncertain, we are not issuing guidance for the year ending 31 March 2021.”
“In the year ahead our priorities are clear - to look after our people and communities, strengthen our relationships with customers, continue to progress our strategy and maintain our financial strength.”
“ Our high-quality portfolio of ingredients and solutions enable consumers to enjoy healthier and tastier food products and drinks. Demand for these products is growing and this trend is here to stay. Combined with our financial strength, this gives me confidence we will navigate this period successfully and that our future prospects remain strong.”
Tate & Lyle shares are up 3.2% to 653p so far this morning.
Hilton Food Group has posted a positive trading update ahead of its AGM later today.
It said that overall the Group’s trading has been in line with the board’s expectations.
During the lockdown period arising from the Covid 19 pandemic, it has experienced increased demand and have worked closely with its retail customers to meet their requirements.
However, at the same time, we have seen increased costs as it worked to ensure the safety of employees by establishing a number of protocols to minimise contact.
In Western Europe, Hilton said it has made “good progress” in a number of markets.
In both the UK and Ireland, turnover has grown strongly relative to last year in the red meat business boosted by the impact of higher meat purchases by consumers during the lockdown period as well as the move to supply 100% of Tesco’s red meat requirements in the UK from mid 2019.
Hilton Seafood UK has “progressed well”, where it has seen a shift from counter sales to centrally packed products.
It has also seen growth in our Scandinavian markets as well as in the Dutch market.
“Hilton is well placed in the current climate as it almost exclusively serves the retail sector.”
In Australia, Hilton continued to see strong growth stemming from the combined effect of the ramp up in Queensland volume as well as increased demand for red meat.
“Hilton continues to explore opportunities in which to invest and to grow the business both domestically and in overseas markets and we are also exploring a number of options for growth with our existing customers,” it stated.
Elsewhere, a surge in demand in the early stages of the coronavirus crisis boosted trading at specialist pet retailer Pets at Home and delivered profits above expectations.
Results for the 52 week period to 26 March 2020 showed that group like for like revenues jumped 9.4% due to “exceptional Q4 demand”. Like for like revenues surged by 15.9% in the fourth quarter.
Total Group revenue exceeded £1bn for the first time, with growth of 10.2% to £1,058.8m
Omnichannel revenues grew by 27.8% or 83% on a 2-year basis, reflecting previous investment in capacity and fulfilment.
Its Vet Group like for like revenues grew by 5.6%.
That growth led to a rise in group underlying profit before tax of 11.0% to £99.5m on a pre-IFRS16 basis, and group underlying free cashflow growth of 40.7% to £89.6m.
CEO Peter Pritchard commented: “In normal circumstances, it would have given me great pleasure to reflect on another year in which we have grown sales and profits and successfully executed our proven pet care strategy. These are, however, far from normal circumstances with the rapid, wide-ranging and devastating effects of COVID-19 having an unprecedented impact on all of our lives.”
It said that nearly all of the exceptional demand witnessed in the closing weeks of Q4 has unwound during Q1 of the current year which, combined with our adherence to guidelines on social distancing across our operations and restrictions on the sale of pet products and health care services deemed non-essential, has temporarily depressed normal levels of group turnover.
While online sales have remained at materially elevated levels, matched by improved capacity and good product availability, they are, in isolation, unable to mitigate the reduced level of in-store sales, and their weighting towards food, together with an additional £5m of costs which will hit its bottom line.
Accordingly, the group anticipates its first half pre-tax profit, including both the one-off benefit from the business rates holiday, will be “materially below” the prior year.
Pritchard added: “Early indications are that some of the behaviours that consumers have displayed during lockdown, notably social distancing and the preference to purchase goods and services safely and conveniently, may persist post exit.
“The current environment lacks precedence in the UK and it is difficult, therefore, to assess the medium to long term effect it will have on consumer behaviour or when we might see normalisation in shopping habits.
“We operate in a large, growing market with favourable demographics and clear, long-term demand drivers. While the current crisis is affecting consumer behaviour across the UK, our pet population is unchanged, pets remain an important part of our lives - possibly even more so as a result of our present circumstances - and still need to be fed, loved and cared for.”
On the markets this morning, the FTSE 100 has fallen back 0.7% to 6,026.1p to undo some of yesterday’s gains.
Pets at Home has slumped 13.2% to 199.3p on the warning over first half profits.
Other fallers include Stock Spirits, down 2.6% to 218.3p, SSP Group (SSPG), down 2.2% to 243.6p and PureCircle, down 2% to 83.3p.
Risers include McColl’s, up 2.4% to 46p, Devro, up 3% to 163.4p and Ocado, up 2.9% to 2,053p.
Yesterday in the City
The FTSE 100 jumped back 1.1% to 6,067.2pts yesterday on renewed hopes of a coronavirus vaccine.
Marks & Spencer jumped 9.9% to 95.2p yesterday after posting its annual results, despite a 20%-plus drop in annual profits.
Other risers yesterday included B&M European Value Retail (BME), up 4% to 356.8p, PureCircle, up 4.4% to 85p, Nichols, up 3% to 1,385p, Compass Group (CPG), up 2.8% to 1,141.5p, Hilton Food Group, up 2.6% to 1,284p and Ocado, up 2.4% to 1,996.5p.
The day’s few fallers included McBride, down 2.9% to 60p, Bakkavor, down 1.7% to 68.9p, Devro, down 1.5% to 158.6p and Greencore, down 1.4% to 138.4p.