Tate & Lyle reported a 5% decline in full-year underlying revenue to 1.5bn (excluding CP Kelco), driven by cost savings being passed onto customers. Underlying cash profit (EBITDA) was up 4%, both in line with group expectations.
CP Kelco’s performance was in line with expectations, as underlying revenue rose by 3% and underlying cash profit (EBITDA) grew by 9%.
Free cash flow (including CP Kelco) was up £20mn to £190mn. Net debt rose by £0.8bn to £1.0bn, reflecting the acquisition of CP Kelco.
Medium-term revenue growth is expected to be at the high end of the group’s 4-6% target range each year. But for 2026, sales growth is expected to be "at, or slightly below " the medium-term range due to potential effect of tariffs, with cash profit growth of around 4-5%.
A final dividend of 13.4p per share was announced, bringing the full-year dividend to 19.8p per share, up 3.7%.
The shares were broadly flat in early trading.
Our view
Tate & Lyle’s full-year results were broadly in line with market expectations, and the integration of CP Kelco is moving along at pace. Revenue in the period fell due to soft pricing, so for now, Tate’s having to lean into cost savings to help keep profits moving in the right direction. Despite market scepticism around its acquisition, the group remains confident about the combined growth potential.
The promised demand acceleration over the second half of Tate’s financial year didn’t materialise. Combined with pricing pressure, revenue remains under pressure in key segments like food & beverage solutions.
We’re also monitoring the potential impact of new weight loss drugs, though we remain sceptical about whether these will move the dial.
On a more positive note, Tate’s making good on its promise to streamline operations and focus on the most profitable parts of the business. The margin benefits are coming through, and an underlying cash profit (EBITDA) margin of 22.3% at year-end was a step up from the prior year.
The core business is in food & beverage solutions, with smaller units focusing on European sweeteners and the sugar alternative Sucralose. But it's the core business, specifically solution-based partnerships, that we see as a key growth driver. This is where it partners with customers to create bespoke solutions to their dietary and nutritional needs. Deeper relationships and closer ties add an element of stickiness to the business and enable Tate & Lyle to leverage its technical expertise.
The £1.4bn CP Kelco deal, a leading provider of pectin, speciality gums and other nature-based ingredients, was a key part of the plan to become a leader in the speciality space. So far, the integration is going well, with strong volume growth and progress on improving margins. The combination is expected to help drive additional sales, but it’s a little early to call this a success – something to watch.
The acquisition added some debt to what is otherwise a rock-solid balance sheet. We aren’t concerned, as we see efforts towards balancing leverage progressing well - with levels still well within the target range and good cash generation can support an orderly reduction should management want to take that route.
The renewed focus on speciality ingredients and solutions, a strong management team, and a balance sheet with enough firepower to expand all give scope for optimism. We don’t think the valuation looks too demanding, now that takeover rumours have been stripped out. That said, uncertainty around US-China tariffs could raise costs and blunt volume recovery, leading to a cautious outlook from management for the year ahead.
Tate & Lyle key facts
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