Tate & Lyle syrup volumes hit as bars and restaurants close

(Reuters) - Britain's Tate & Lyle TATE.L said on Monday it had seen a slide in U.S. demand for the sweeteners and syrups used by bars, restaurants and fast food joints in the past month as thousands of businesses were closed by coronavirus lockdowns.

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The company, one of the world’s big producers of sweeteners like high fructose corn syrup, said it expected to report results slightly ahead of its forecast for the year ended March 31, as it was not significantly hit by the pandemic in March.

That reflected a jump in demand for its ingredients used in packaged food, as consumers stocked up on essentials, and Chief Executive Officer Nick Hampton said all of its manufacturing facilities were open and customers were getting their orders.

The company’s shares, however, lost more than 3% as it warned of more impact on its business in April, with volumes for “bulk sweeteners” such as glucose syrup down 26%.

Industrial starch volume was 9% lower in April as the closure of offices and schools reduced demand for paper and packaging.

The company also said its commodities business was hit by a sharp fall in ethanol prices following the collapse in crude oil markets.

“Primary products have taken the inevitable hit from the rapid decline of US soft drinks under lockdown,” Jefferies analysts said in a note to clients. “It feels like consensus (of results forecasts) has to come down.”

Tate & Lyle has been looking to sharpen its focus on categories including drinks, dairy and soups, while simplifying its business and seeking more innovation, partnerships and acquisitions.

For the company, which sold its traditional sugar refining business a decade ago, that includes a focus on speciality food ingredients like artificial sweeteners and other products including starch, which carry higher margins.

Like thousands of other companies, it took cost-cutting measures in March including a freeze on salary increases and recruitment, non-essential discretionary spending and a reprioritising of capital commitments.

It said it has strong liquidity with access to over $1 billion through cash on hand and a revolving credit facility.

The company also completed the sale of its oats ingredients business last year as it no longer meshed with its mainstream food categories.

Reporting by Pushkala Aripaka and Tanishaa Nadkar in Bengaluru; Editing by Anil D’Silva, Patrick Graham and Emelia Sithole-Matarise