Tate and Lyle PLC (LON: TATE) have seen their shares rally after a trading updated released on Thursday showed profits increasing and strong consumer demand.
Shares of Tate and Lyle rallied 5.78% to trade at 702p during Thursday trading. 7/11/19 11:52BST.
The FTSE250 listed (INDEXFTSE: MCX) food and drink ingredient supplier posted a bullish trading update to shareholders, which sparked investor optimism.
Tate and Lyle reported a pretax profit for the six months to the end of September of £164 million, 45% higher compared to £113 million a year ago, as sales grew by 6.7% to £1.48 billion from £1.38 billion.
This comes at an interesting time considering the state of the supermarket and food industry in the UK.The big supermarkets have seen their profits sink and business slow in a tough UK domestic market.
This morning, Sainsbury’s (LON: SBRY) reported a huge profit sink which alerted shareholders to poor business performance.
Additionally, Marks and Spencer (LON: MKS) have closed 120 off their high street stores amidst a crisis which has seen a huge slump in sales.
The London-headquartered company said new product sales were 12% higher year-on-year, driven largely by the clean-label starches and fibre products.
Tate & Lyle increased its interim payout to 8.8 pence a share from 8.6p paid a year prior.
“We made encouraging progress in the first half,” said Chief Executive Nick Hampton. “Our priorities to sharpen the focus on our customers, accelerate portfolio development and simplify the business are driving momentum across the organisation and supporting performance.”
Looking ahead, Hampton added: “Despite market challenges, our outlook for the year ending March 31, 2020, is unchanged and we continue to expect earnings per share growth in constant currency to be broadly flat to low-single digit.”
The company concluded that it was on track to deliver its £100 million productivity target, which was a bonus to shareholders.
This programme started last year to drive supply chain and selling and administration costs benefits, delivering £25 million in productivity benefits in its first year.