Tate & Lyle is a supplier of ingredients for the food and beverage industry. Its main business, Food & Beverage Solutions, includes sweeteners, texturing agents that modify the viscosity and creaminess of foods, and ingredients designed to enrich products with fiber or nutrients. CP Kelco is the second largest contributor to revenue, while Tate & Lyle also produces sucralose, a highly concentrated artificial sweetener. Finally, the Primary Products Europe division focuses on products derived from corn processing (isoglucose, industrial starches, co-products for animal feed). This segment is losing momentum and uses far more money than it brings in.
The stock has been struggling for three years now, with a few short-lived rebounds having changed nothing. Investors were already only interested in the dividend, which yielded between 4% and 5%. A glance at the accounts is enough to understand how the situation came about. Until 2022, growth remained virtually zero in a market that was difficult but not insurmountable. The company then sold off a large part of its US operations (hence the hole that year) before acquiring CP Kelco, as mentioned above. As a result, 2024 EPS is exactly the same as it was ten years ago, clear evidence of stagnation.
Very timid outlook
The trend is not expected to reverse: both revenue and EBITDA are expected to decline by a few percentage points in the fiscal year ending March 2026. This stands in stark contrast to the ambitions announced just a few months ago, when the company was targeting annual growth of 4%-6% in the medium term.
Tate & Lyle is suffering from declining consumption, especially in America, where it has retained its food and beverage businesses after divesting its commodity-related operations. The economic situation is hardly any better in Europe, the Middle East, and Africa. In Asia-Pacific, relative stability actually masks the negative impact of tariffs.
A controversial major acquisition
Let's get back to CP Kelco, which was acquired for $1.8bn. The deal was presented as the culmination of the transformation of Tate & Lyle, which was previously a sugar producer. It was intended to enrich the portfolio of "clean label" solutions (perceived as more natural and transparent) and accelerate its move upmarket. For the time being, synergies and cost savings have yet to materialize.
Aware of the difficult context, the group has unveiled a plan designed to boost its commercial momentum: better customer segmentation, accelerated innovation with major brands, optimization of the industrial network, and synergies from the integration of CP Kelco. These measures are not currently credible in light of the latest published figures.
