“We estimate 6-7% [growth] ahead in line with the FY2010/11 performance. The plans to re-open the sucralose facility in the US are proceeding in line with expectations. Whilst T&L continues to invest in price and margin to secure long-term customer contracts and support Sucralose volumes, it continues to expect partially positive value growth in the full year.”
Commenting on the back of T&L’s trading update for the April-June period that saw the company stick to yearly profit forecasts of around €330m, Shirley and Black said the company was in “good hands”, but detail about growth needed to be fleshed out.
“T&L is in good hands, to our minds,” they said. “The management team under CEO Javed Ahmed is now settled and well into the 'Focus, Fix & Grow' strategy; the latter variable remaining the one with the most detail still to be enacted and articulated.”
Shirley and Black observed that the concentration of activity in specialty offerings had been demonstrated by the sale of commodity-style sugar and molasses assets.
“T&L is seeking to evolve into what it calls a 'leading global provider of speciality food ingredients and solutions', augmented by the sustained cash generation from operating a disciplined and better constituted [business] than of the old bulk ingredients activity.”
In its presentation, T&L said bulk ingredients like liquid sweeteners were performing well in Mexico and the Americas where, “capacity utilisation is in a good place right now”. But European margins were under pressure increased input costs, although starch prices had firmed.
In regard to the coming year T&L management stated: “Overall, our expectations for the full year remain unchanged and we continue to anticipate another year of profitable growth.”
Shirley and Black added: “To reach its aspired aims T&L is engaging in a lot of background work to create a more simple and efficient central overhead with a common operating platform, shared business services and a stronger capability for innovation and commercial development. Management sees a market in specialty food ingredients that is expected to grow at 5% per annum, and has attractive margin credentials. In T&L’s specialty food ingredients division the attractive nature of the markets are reflected in a 25%+ return on sales versus 8% in bulk ingredients.”