Tate & Lyle yesterday scotched rumours it is about to sell out of its traditional sugars business and said it will instead focus more on speciality food ingredients as its key growth market.
The maker of the iconic golden syrup brand reported annual revenues flat at £3.5bn and net profits down by 77 per cent, hit by a £217m impairment charge from the mothballing of a proposed ethanol plant.
Its chief executive, Javed Ahmed, who joined Tate & Lyle from Reckitt Benckiser in October, said the company will be reorganised into three divisions: speciality foods, including artificial sweeteners and some starch products; bulk ingredients such as corn syrup; and the long-standing sugars business.
Cash from the two commodity divisions will be used to fund growth, Mr Ahmed said. "We are refocusing our strategy, with our speciality food ingredients business being the key focus of investment and long-term growth, as well as making a number of important changes to the group's organisation," he said.
"Through these changes, and a strong focus on operational excellence and execution, we will build the platform to deliver sustainable long-term growth," he added.
The decision to stop work on the planned ethanol plant at Fort Dodge in Iowa was blamed on the "depressed and volatile outlook for ethanol, and uncertain conditions in industrial starch and corn gluten feed markets".
Tate & Lyle has already moved a long way from its beginnings as a Victorian sugar giant. Operating profits in the sugars division shot up by 150 per cent last year, thanks to improved margins and an institutional price change. But with demand falling and competition intense, around two-thirds of the group's profits come from sweeteners such as Splenda, as well as starches used in ready-meals and ethanol products for drinks.
Graham Jones, an analyst at Panmure Gordon, said: "There is nothing particularly surprising in Javed Ahmed's strategic review, but everything Tate is saying seems rational and logical."
Tate & Lyle is recommending a flat dividend of 22.9p. The group's shares closed down 2.19 per cent at 415.3p.