In a trading update, it said that April had seen “some significant changes in demand patterns”, with the lockdowns in many countries across the world, particularly in the group’s largest markets of the US and Europe. However, all its manufacturing facilities had remained fully operational during the pandemic.
Food and beverage solutions and Sucralose continued to “perform well” during the month of April, it added.
Volume for food and beverage solutions was in line with the comparative period and Sucralose 18% higher, due to phasing of customer orders.
It said that, earlier in the month, demand was strong for ingredients used in packaged and shelf-stable foods as consumers in North America and Europe filled their pantries for consumption at home. As the month progressed, this was offset by lower demand for products consumed out-of-home, such as in the foodservice sector.
The reduction in out-of-home consumption saw primary products volume “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.
Industrial starch volume was 9% lower, reflecting reduced demand for paper and packaging following the closure of schools, offices and a general decline in economic activity. Commodities were also impacted as ethanol prices decreased sharply, it said.
The financial impact of lower demand was partially mitigated by actions taken in March to optimise cash and reduce costs, it said. These included freezing salary increases and recruitment, stopping non-essential discretionary spend and re-prioritising capital commitments.
“I am also very proud of the way we have responded to the unprecedented challenges of COVID-19. From the outset of the pandemic, our priority has been to look after our employees and local communities, keep our operations running and support our customers,” said Nick Hampton, chief executive of Tate & Lyle.
“The fact that all our manufacturing facilities have remained fully operational during the pandemic and customer orders have continued to be fulfilled, often at very short notice, is a testament to the commitment and skill of all our employees.”
Darren Shirley from analysts Shore Capital said “it is no surprise” that demand was strong for ingredients used in packaged and shelf-stable foods across both North America and Europe.
Shirley said that while visibility in profitability was reduced, it was reassured that Tate & Lyle has materially strengthened its balance sheet in recent years.
He added that, in the current environment where cash conservation is “very much the order of the day”, Shore Capital was placing a “significant question mark” over Tate & Lyle’s capability/desire to maintain short-term dividend payments.
Tate & Lyle will issue its results for the year ended 31 March 2020 on 21 May 2020.
In March 2019, the company disposed of its oat ingredients facility in Sweden to focus on other areas of the business.
The company also appointed Imran Nawaz as its new chief financial officer, with effect from 1 August 2018.