(Adds analyst comment, updates shares, background)
By Tanishaa Nadkar
May 4 (Reuters) - Britain's Tate & Lyle said on
Monday it had seen a slide in U.S. demand for the sweeteners and
syrups used by bars, restaurants and fast food joints in the
past month as thousands of businesses were closed by coronavirus
lockdowns.
The company, one of the world's big producers of sweeteners
like high fructose corn syrup, said it expected to report
results slightly ahead of its forecast for the year ended March
31, as it was not significantly hit by the pandemic in March.
That reflected a jump in demand for its ingredients used in
packaged food, as consumers stocked up on essentials, and Chief
Executive Officer Nick Hampton said all of its manufacturing
facilities were open and customers were getting their orders.
The company's shares, however, lost more than 3% as it
warned of more impact on its business in April, with volumes for
"bulk sweeteners" such as glucose syrup down 26%.
Industrial starch volume was 9% lower in April as the
closure of offices and schools reduced demand for paper and
packaging.
The company also said its commodities business was hit by a
sharp fall in ethanol prices following the collapse in crude oil
markets.
"Primary products have taken the inevitable hit from the
rapid decline of US soft drinks under lockdown," Jefferies
analysts said in a note to clients. "It feels like consensus (of
results forecasts) has to come down."
Tate & Lyle has been looking to sharpen its focus on
categories including drinks, dairy and soups, while simplifying
its business and seeking more innovation, partnerships and
acquisitions.
For the company, which sold its traditional sugar refining
business a decade ago, that includes a focus on speciality food
ingredients like artificial sweeteners and other products
including starch, which carry higher margins.
Like thousands of other companies, it took cost-cutting
measures in March including a freeze on salary increases and
recruitment, non-essential discretionary spending and a
reprioritising of capital commitments.
It said it has strong liquidity with access to over $1
billion through cash on hand and a revolving credit facility.
The company also completed the sale of its oats ingredients
business last year as it no longer meshed with its mainstream
food categories.
($1 = 0.8052 pounds)
(Reporting by Pushkala Aripaka and Tanishaa Nadkar in
Bengaluru; Editing by Anil D'Silva, Patrick Graham and Emelia
Sithole-Matarise)
Tate & Lyle (TATE)
