Tate & Lyle set for low-end earnings growth after CP Kelco acquisition

(Sharecast News) - Tate & Lyle reported third quarter volume and EBITDA growth in an update on Thursday, despite a decline in revenue before accounting for its acquisition of CP Kelco, although it said full-year earnings growth was now expected to be at the lower end of guidance. The FTSE 250 ingredients company said group revenue rose 14% to £423m, driven by the acquisition of CP Kelco, which contributed £66m following its completion in mid-November.

Excluding CP Kelco, revenue declined 4% to £357m, with food and beverage solutions down 4% due to the pass-through of lower input costs, while sucralose grew 19% as customer order pull-forward continued.

Primary products Europe saw a 24% decline.

The company said it continued to drive productivity savings, and remained on track to achieve its five-year target of $150m in efficiency gains.

CP Kelco performed in line with expectations, delivering strong volume growth and progress on phased margin recovery.

Integration efforts were advancing as planned, reinforcing confidence in achieving the targeted $50m in cost synergies by the end of the 2027 financial year.

Tate & Lyle said it would operate as a single business from this April.

The company said it successfully renewed contracts for 2025, expecting volume and revenue growth despite ongoing geopolitical uncertainties and pricing pressures.

Cash generation remained strong, with Tate & Lyle completing its £215m share buyback programme in January.

It also raised $300m and €275m in the private placement market to refinance the bridge facility for the CP Kelco acquisition.

For the full year, excluding CP Kelco and at constant currency, revenue was now expected to decline by a mid-single-digit percentage, with EBITDA growth at the lower end of the previously guided 4% to 7% range.

"This was another quarter of good volume and EBITDA performance," said chief executive officer Nick Hampton.

"Each region delivered volume growth, and we saw strong productivity and cash delivery.

"The muted consumer demand environment and ongoing geopolitical uncertainties reinforce the importance of the steps we have taken to reposition Tate & Lyle over the last six years."

Hampton said that in this environment, the firm was focussed on delivering profitable volume growth through stronger solutions-based relationships with customers, delivering productivity savings and strong cash flow.

"We also made excellent strategic progress in the quarter with the completion of the acquisition of CP Kelco, a leading global pectin and speciality gums business.

"This acquisition represents a significant acceleration in the delivery of our growth-focused strategy and establishes Tate & Lyle as a leader in mouthfeel, while strengthening expertise across our sweetening and fortification platforms.

"Mouthfeel is a critical driver of customer solutions, and we are encouraged by the positive response of customers to the benefits of our expanded portfolio and solutions capabilities."

At 0928 GMT, shares in Tate & Lyle were down 10.17% at 567.7p.

Reporting by Josh White for Sharecast.com.