LONDON (Reuters) - British food ingredients company Tate & Lyle (TATE.L) is stepping up efforts to accelerate profit growth, its new CEO said on Thursday after reporting a 13 percent jump in adjusted full-year earnings, sending its shares up by 7 percent.
To counter a tough food and drink market, the provider of sweeteners and other ingredients said it will sharpen its focus on key categories including drinks, dairy and soups, while simplifying its business and seeking more innovation, partnerships and acquisitions.
CEO Nick Hampton, who took the reins last month, also said Tate & Lyle would deliver $100 million in productivity savings over four years.
The company reported pretax profit up 13 percent at 301 million pounds excluding one-off items and currency fluctuations in the year to March 31, with adjusted earnings per share rising 7 percent to 50.1 pence, in line with analyst expectations.
Sales, however, fell 2 percent to 2.7 billion pounds, hurt by a 10 percent drop in sales of sucralose sweetener.
Looking ahead, Tate & Lyle expects earnings per share growth for the current financial year to be at the lower end of a mid-single-digit range as it contends with higher commodities prices and costs for energy and transport in North America.
However, the company said that the new measures being taken would speed up earnings growth, while return on capital and cash generation should also improve.
“We welcome the evolution, but the devil will be in the detail as Tate enters a challenging year zero under the new regime,” Jefferies analyst Martin Deboo said, referring to new CEO Nick Hampton and his replacement as finance chief, Imran Nawaz.
In recent years Tate has concentrated more on speciality food ingredients, which carry higher margins than its much larger and more commoditised business of bulk ingredients.
Tate’s London-listed shares were up 7.1 percent 652 pence by 0849 GMT.
Reporting by Martinne Geller; Editing by Mark Potter and David Goodman