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Tate & Lyle shares slip despite positive update

Discussion in 'Market News' started by Lily, Oct 9, 2015.

  1. Lily

    Lily Forum Member

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    Shares fall after recent recovery, as company says trading in line with forecasts

    After a troubled time which included a profit warning in May, food ingredients firm Tate & Lyle has issued a more positive update.

    But after a revival in its shares since August, they have succumbed to some profit taking, down 14p or 2.4% at 565.5p. The company said trading in the first half was in line with expectations and its full year guidance remained unchanged. Speciality food ingredients performed ahead of the same time last year, while bulk ingredients benefited from solid demand for sweeteners, but commodities were hit by low ethanol margins in the US.

    Growth across speciality food ingredients, sucralose and bulk sweeteners & starches is proving sufficient to offset headwinds in ethanol. Tate is cautious as usual on the sweetener pricing round. We continue to think that this will conclude positively.

    The scars of 2014 seem to have reinforced Tate’s penchant for cautious trading commentary. Underneath this, the second quarter update passes the sniff test for us: speciality food ingredient starches have returned to growth. Food Systems and, significantly, Sucralose, are growing volumes. Demand for Bulk Sweeteners is reported as solid. Only ethanol is spoiling the party.

    The results show that the company’s performance is stabilizing and a lack of negative news should be taken positively by the market. We rate Tate a buy and see 2016 as an inflection point.

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