Tate & Lyle forecasts 'lower than expected' Splenda sales

By Anthony Fletcher

- Last updated on GMT

Related tags Splenda Sucralose

Tate & Lyle has predicted sales and profits of its Splenda
sucralose product to 'only modestly' increase due to a slower than
anticipated acceleration of uptake from major customers.

In its trading update for the year ending 31 March 2007, the company said that while overall trading for the nine months to 31 December 2006 has continued to comfortably exceed the corresponding period of the prior year, the lower than expected contribution from Splenda sucralose means that the growth of value added profits will be significantly below the groups target of 30 per cent.

Given this and the impact on overseas earnings of the weakness in the US dollar, group profit before tax, exceptional items and amortisation for the year to 31 March 2007 is now likely to be modestly below current market expectations, albeit well ahead of the previous year.

"Splenda sucralose has seen good demand from the food and still beverage sectors and international expansion is well underway, now that additional manufacturing capacity is available,"​ said the company in today's trading statement.

"We have an extensive product development pipeline with our customers across several markets, although the process of reformulation is taking longer than expected. Volumes to the US carbonated soft drink sector have not met our expectations this year and additional resources have been deployed to address this."

The company said that while Food & Industrial Ingredients, Americas continues to perform strongly, Food & Industrial Ingredients, Europe achieved what it described as a "satisfactory pricing round for the 2007 calendar year"​.

Results for the second half-year are now expected to be similar to the corresponding period of the prior year, albeit after benefiting from a lower depreciation charge. Sugars, Europe will be negatively impacted by the over supply of sugar in the market, a result of the slow surrender of quota to date.

Sugars, Americas and Asia continues to trade in line with the group's expectations.

Tate & Lyle had a challenging year last year, but not as tough as 2005 when profits fell 79 per cent to 62 million euros. Changes to the EU sugar regime hit the firm hard, and Tate & Lyle has since been working hard to develop a strategy that addresses the new situation.

The company has said that it intends to continue to develop its value added food ingredients business in Europe through its Global Food Ingredients Group, and expects to supplement its value added business through the acquisition of bolt-on ingredient companies.

For example, Tate & Lyle acquired Cesalpinia Food in December 2005 in a bid to broaden its European portfolio by adding stabilising systems and gums.

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