Javed Ahmed, Chief Executive, said:
“As we announced on 23 September, the Group’s performance in the first half has been significantly held back by operational and supply chain disruption and an increasingly competitive market for SPLENDA® Sucralose. Notwithstanding these factors, the fundamentals of our business are robust with particularly strong growth in the emerging markets for our Speciality Food Ingredients business excluding SPLENDA® Sucralose, a high quality innovation pipeline and a resilient, cash generative Bulk Ingredients business. We are firmly focused on taking the necessary steps to work through the issues we face and improve the Group’s performance.”
Key points
- Group adjusted profit before tax 34% lower in constant currency at £104m (2013 ‒ £173m):
- Operational and supply chain disruption costs of £31m
- The effect of price erosion for SPLENDA® Sucralose of £18m
- Group reported sales 21% lower at £1,200m (2013 ‒ £1,516m) largely due to:
- Pass through of lower corn prices and price erosion for SPLENDA® Sucralose
- Adverse impact of the strength of sterling against the US dollar and other currencies
- Speciality Food Ingredients adjusted operating profit 37% lower in constant currency at £66m (2013 – £112m)
- Bulk Ingredients adjusted operating profit 10% lower in constant currency at £76m (2013 – £92m)
- 5.1% increase in interim dividend to 8.2p (2013 – 7.8p)
- Appointment of Joan Braca as President, Speciality Food Ingredients
Outlook
Our outlook for the full year to 31 March 2015 remains unchanged from our trading statement on 23 September 2014. For the second half, we expect Speciality Food Ingredients excluding SPLENDA® Sucralose and Bulk Ingredients to continue to perform solidly, but this will be more than offset by a softer performance in SPLENDA® Sucralose and additional supply chain costs. This, together with the first half performance, leads us to expect Group adjusted profit before tax7 for the full year to be in the range of £230 million to £245 million.
As usual, performance in the final quarter of the financial year will be influenced by the outcome of the calendar year pricing round, and also assumes normal weather patterns.
1 Including proportionate consolidation of sales of joint ventures of £180 million (2013 - £221 million).
2 Including proportionate consolidation of operating profit of joint ventures of £36 million (2013 - £37 million) and before an exceptional charge of £9 million (2013 - £6 million) and amortisation of acquired intangible assets of £4 million (2013 - £5 million)
3 Before proportionate consolidation of tax charge of joint ventures of £8 million (2013 - £8 million), and adjusted for the exceptional charge, amortisation of acquired intangible assets in adjusted operating profit in (2) above and retirement benefit interest and, for adjusted diluted earnings per share, the tax effect of these items.
4 Changes in constant currency are calculated by retranslating comparative period results at current period exchange rates.
5 Prior period restated for the adoption of IFRS 11 ‘Joint Arrangements’
6 Net debt includes share of net cash in joint ventures, comparative information stated is for 31 March 2014 7 Based on forecast foreign exchange rates of GBP:USD £1/$1.69. Profit before tax adjusted for full year effect of the adjustments described in (3) above.
