MIDAS SHARE TIPS UPDATE: Tate & Lyle tastes growing returns as its products remove four million tons of sugar from our food and drink
Tate & Lyle sugar and Lyle’s Golden Syrup are two of the best-known brands on the British supermarket. But they have not been part of Tate & Lyle group for more than a decade.
The company sold off the sweet and sticky parts of its business in 2010 to focus on bulk commodities such as corn and special ingredients such as Sucralose.
Over the past year, chief executive Nick Hampton has gone one stage further, selling a controlling stake in the bulk business and devoting Tate to products that make food healthier but still good to eat.
Healthy option: Tate & Lyle sold off the sweet and sticky parts of its business in 2010 to focus on bulk commodities such as corn and special ingredients such as Sucralose
These include natural sweeteners, starches that make food taste satisfying and fibres to aid digestion – and they can be found in thousands of everyday products, from breakfast cereals and yogurts to sport drinks and milkshakes.
Full-year figures to March 31, released last week, suggest that Hampton’s decision was right. Revenues from the new business rose 18 per cent to £1.375billion, while profits were 14 per cent ahead at £145million.
The dividend is 29 per cent lower at 21.8p, as the bulk ingredients division is no longer part of the group, but shareholders received a £1.07 special divi last month, which helps to compensate for the latest reduction in payment.
Looking ahead, prospects are promising. The world is growing fatter but that needs to stop and Tate’s ingredients can make the process less painful.
Over the past two years alone, its products have removed four million tons of sugar from our food and drink, equivalent to 16trillion calories. This trend is set to accelerate through both organic growth and acquisition.
Midas verdict: Midas recommended Tate & Lyle in 2015, when the shares were £6.08. They are now 22 per cent higher at £7.44 and should continue to gain ground. Existing shareholders should stick with the business. New investors could take a bite too.
Traded on: Main market Ticker: TATE Contact: tateandlyle.com or 0371 384 2063
