Tate & Lyle (LON:TATE) said trading in its third quarter was in line with expectations and consistent with the first half, while the company reiterated that its full-year guidance remains unchanged, according to comments on its Q3 trading statement call led by Chief Executive Nick Hampton and Chief Financial Officer Sarah Kuijlaars.
On a pro forma basis and in constant currency, revenue was 2% lower in the quarter, which management attributed to “continued muted market demand,” with performance in all regions broadly in line with the first half. On a reported basis, which includes CP Kelco from the date of acquisition on Nov. 15, 2024, group revenue was 15% higher.
Regional trends and nine-month performance
Hampton said Q3 trends were consistent with the first half, noting in the Americas that higher pricing was more than offset by volume declines. In EMEA, he described volume as “pretty flattish” and pointed to pricing investment as a driver of lower revenue. In APAC, he highlighted “encouraging” revenue growth driven by higher volume, adding that improvement in China seen in the first half continued into the third quarter, alongside “solid demand” in Japan and Korea.
By category, Hampton said EMEA dairy and beverages were more resilient, while bakery and snacks were “a bit softer.” In Asia, he described overall category performance as robust.
Framework renewals and selective pricing investment
Management said renewal of customer framework agreements for the 2026 calendar year was “well advanced,” and emphasized that returning to top-line growth is the company’s top priority. Hampton and Kuijlaars said the company has been selectively investing in pricing to support volume momentum and revenue growth amid a muted demand environment.
Kuijlaars described the approach as “very selective,” applied “by product, by customer, by region,” and tied to positioning the business for growth following the CP Kelco acquisition and the resulting broader portfolio. In a later exchange, management said it was still completing the renewal process and would provide a more precise view at full-year results, but indicated it is doing “a little bit more” pricing investment in the upcoming renewal cycle than in the prior year to drive momentum with key customers.
Asked about whether unit margin focus had changed, Hampton said it had not, but added that the company is balancing levers to return to growth in a sluggish market, requiring “some choices about where we invest.” Over time, he reiterated an expectation to focus on maintaining unit margins and improving margins through mix.
Customer engagement, innovation pipeline, and key demand themes
Hampton said customer engagement remained high, citing the value of cross-selling opportunities in the new business pipeline increasing by more than a third in the quarter. He also said the company is seeing double-digit growth in its innovation pipeline to customers.
In response to questions about fourth-quarter expectations, Hampton said the company is seeing “encouraging signs of increased customer engagement on reformulation,” including customers “increasingly thinking about the need to put price back in to drive momentum.” However, he emphasized that Tate & Lyle is “not assuming any improvements in market outlook in the fourth quarter” in its underlying guidance for the financial year. He added that performance so far entering the fourth quarter was consistent with expectations.
Management highlighted several demand themes it believes are driving customer projects:
- Fiber fortification: Hampton called fiber a “big global trend,” referencing growing engagement with the company’s fiber portfolio, particularly in beverages and dairy in the U.S., while also seeing the trend across Europe and Asia.
- Renovation for value: Hampton cited customer interest in cost efficiency and product renovation.
- Sugar reduction and mouthfeel: Hampton said controlling texture and mouthfeel becomes critical as sugar is reduced, and described this as an area where the CP Kelco combination strengthens the company’s offering.
On the fiber portfolio specifically, Hampton said Tate & Lyle is seeing an increasing pipeline and expects the trend to continue as customers seek more nutritious processed foods. In a later answer, he said the company’s fiber products generate “very nice margins,” and described fiber fortification as driving a “solutions model” that can be “stickier” and supportive of margins. Kuijlaars added that successful fiber fortification often requires mouthfeel solutions, aligning with the company’s broader capabilities.
CP Kelco integration, synergies, and productivity savings
Hampton said revenue synergies from the CP Kelco combination were growing in line with expectations. He also reiterated confidence that run-rate cost synergies would exceed the company’s target of $50 million by the end of the 2027 financial year. Kuijlaars said integration was progressing well and described cost synergies as “well in hand,” while emphasizing the benefits of presenting a combined portfolio through a unified commercial organization during customer discussions.
The company also highlighted its ongoing five-year, $200 million productivity program, which Hampton said continued to operate well and delivered further savings in the quarter. In addressing questions about how pricing investments could affect margins into fiscal 2027, management pointed to productivity delivery and accelerating benefits from the CP Kelco combination as offsets, but said it would provide clear fiscal 2027 guidance at full-year results once planning is complete.
Foreign exchange and raw material costs
Kuijlaars said foreign exchange was a headwind in the first nine months, driven by the U.S., equating to roughly a 2% to 3% impact on revenue, which the company expects to continue. She added the impact is “slightly higher” on EBITDA given the contribution from the North American business, and noted some offset from strength in Europe.
On raw materials, Kuijlaars said the company’s input basket is now broader following CP Kelco—extending beyond corn to include items such as pectins and seaweed—and described the environment as “more benign,” with costs broadly flat year over year and “nothing significant” in terms of inflationary pressure.
In closing remarks, Hampton reiterated that third-quarter trading was in line with expectations and that full-year guidance remains unchanged. He said the company is focused on actions to improve top-line performance in the near term and remains positioned to benefit from trends toward healthier and more nutritious food and drink, supported by its portfolio breadth and formulation expertise.
About Tate & Lyle (LON:TATE)
Tate & Lyle PLC, together with its subsidiaries, provides ingredients and solutions to the food, beverage, and other industries in the United States, the United Kingdom, other European countries, and internationally. It operates through three segments: Food & Beverage Solutions, Sucralose, and Primary Products. The company offers dairy products, soups, sauces, and dressings; bakery products and snacks; texturants; nutritive sweeteners, such as high fructose corn syrup and dextrose; fibres; and stabilizers and functional systems.
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