Tate & Lyle faces £125M in costs for restructure

By Rod Addy contact

- Last updated on GMT

Ahmed: 'Steady flow of new products'
Ahmed: 'Steady flow of new products'

Related tags: Sucralose

Tate & Lyle has announced a restructure of its international ingredients business, which focuses it on its Speciality Food Ingredients (SFI) division in Europe and will cost £125M.

The move entails re-aligning its Eaststarch European joint venture (JV) with Archers Daniels Midland (ADM) in Europe and restructuring its Splenda Sucralose activity.

The firm has signed an agreement with ADM to re-align their Eaststarch corn wet milling joint JV.

Under the terms of the deal, Tate & Lyle will strengthen its SFI business by acquiring full ownership of the more speciality-focused plant in Slovakia. It will also exit its European Bulk Ingredients plants in Bulgaria, Turkey and Hungary and get €240M (£172.2M) in cash.

Bulk sweeteners

As a result, it will substantially exit from bulk sweeteners in Europe before future investment is needed following the reform of the EU Sugar Regime in 2017. In addition, the proportion of its adjusted operating profit from SFI will grow from 50% to 55%, effectively representing all of its European profit.

On top of this, it is cutting costs in its Splenda Sucralose business by consolidating production at its US factory in Alabama and closing its Singapore plant in spring 2016.

Tate & Lyle said it expected its Splenda Sucralose operation to be at around breakeven in the year ended March 31, 2016, and to return to profitability in the following financial year.

Low-calorie food

Demand for sucralose remained strong, it said, driven by consumer appetite for low-calorie food and drink as well as the “superior taste and functionality”​ of the sweetener. However, a substantial increase in capacity in the market, particularly in the past two years, had transformed trading and it did not expect this to change in the short-term, it added.

Net costs for the re-alignment of its business would be £125M, representing a profit of about £60M for disposals and exceptional charges of about £185M, the company claimed.

“By re-aligning the Eaststarch JV we will focus in Europe on SFI and our Bulk Ingredients will become a predominantly North American business with strong market positions and efficient, scale assets,”​ said Tate & Lyle ceo Javed Ahmed.

Splenda Sucralose

“We are restructuring Splenda Sucralose as a more sustainable business. Our broader SFI business has an expanding global footprint and a steady flow of new products targeted at the higher growth health and wellness space, and is well-positioned for future growth.

“Overall, the actions announced today streamline and further focus Tate & Lyle as it continues to transition to a global SFI business supported by cash generation from Bulk Ingredients.”

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