Nov. 3 (Bloomberg) -- Tate & Lyle Plc, the maker of low-calorie sweetener Splenda, said fiscal first-half profit more than doubled, beating estimates, on increased sales of specialty products and higher corn prices. The shares rose to the highest in almost five years.
Net income through September rose to 175 million pounds ($278.2 million), or 38.9 pence a share, from 70 million pounds, or 15.1 pence, the London-based company said in a statement today. Adjusted pretax profit jumped 38 percent to 180 million pounds. That beat the consensus estimate by more than 10 percent, according to analysts at Investec Securities and Panmure Gordon & Co.
“We haven’t seen the weakness in the economy affect our business,” Chief Executive Officer Javed Ahmed said on a conference call. “The biggest challenge is how to maintain growth. Until we get some clarity on what is happening in the euro zone, we won’t have much visibility.”
Ahmed has sold Tate’s sugar interests to focus on more profitable units including specialty food ingredients and bulk ingredients.
Tate & Lyle shares rose 33.5 pence, or 5.2 percent, to 679 pence, the highest since January 2007 and the biggest gain in a year. That extended this year’s advance to 31 percent and lifted its market value to 3.2 billion pounds.
Sales rose 19 percent to 1.54 billion pounds, compared with a 1.5 billion-pound NCB Stockbrokers estimate. Sales of artificial sweeteners jumped 17 percent by volume and 5 percent by value as prices fell.
Tate & Lyle reported a one-time gain of 73 million pounds relating to the decision in May to restart production of Splenda at its mothballed plant in Alabama, offset by 6 million pounds of restructuring charges. Production is expected to resume in the first half of the next fiscal year
“Profits for the full year are expected to be more heavily weighted towards the first half than usual,” the company said in the statement. That was “mainly due to the exceptionally strong performance from co-products during the first half.”
Analysts may “nudge up” current estimates of full-year adjusted operating profit of 305 million pounds as a result of the strong performance of co-products, Chief Financial Officer Tim Lodge said on the conference call.
Panmure Gordon analyst Graham Jones, who has a “hold” rating on the stock, lifted his full-year estimate for adjusted operating profit to 315 million pounds from 303 million pounds.
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