Tate & Lyle delivers strong Q3 performance as CP Kelco integration advances

Tate & Lyle PLC has reported a robust performance for the three months ending 31 December 2024, demonstrating resilience amid global economic challenges. The company recorded volume and EBITDA growth, driven by strong demand across its Food & Beverage Solutions division. Additionally, the completion of its CP Kelco acquisition in November marked a significant milestone in Tate & Lyle’s long-term strategy, reinforcing its position in the specialty food ingredient market.

The company’s latest trading update reflects steady progress in operational efficiencies and integration efforts following the CP Kelco acquisition. While revenue experienced a slight decline due to input cost deflation, productivity initiatives and strategic contract renewals are expected to support future growth.

How is CP Kelco’s integration impacting Tate & Lyle’s growth strategy?

The acquisition of CP Kelco, a global leader in pectin and specialty gums, has significantly expanded Tate & Lyle’s capabilities in texture, mouthfeel, and stabilization solutions. The integration process remains on track, with a strong focus on three key priorities: customers, people, and performance. Tate & Lyle is confident in achieving its targeted cost synergies of $50 million by the end of the 2027 financial year, in addition to unlocking substantial revenue synergies over the medium term.

Chief Executive Nick Hampton emphasized that the combination of the two businesses strengthens customer relationships and enhances the company’s ability to meet the growing demand for food ingredient solutions. The acquisition accelerates Tate & Lyle’s strategy of expanding its portfolio beyond sweeteners and fortification, positioning it as a leading innovator in textural solutions.

The CP Kelco business performed in line with expectations, delivering strong volume growth throughout 2024. With the integration progressing smoothly, Tate & Lyle has announced that from 1 April 2025, CP Kelco will be fully incorporated into its business structure. This move is expected to enhance operational efficiencies and streamline product offerings for customers seeking innovative food ingredient solutions.

What are the key financial highlights for Tate & Lyle’s Q3 results?

During the quarter, Tate & Lyle’s Food & Beverage Solutions division recorded a 4% volume increase across all regions, reflecting continued customer demand. However, revenue declined by 4%, primarily due to lower input costs being passed on to customers. Sucralose, a key product segment, reported a strong performance with a 19% revenue increase, benefiting from a pull-forward of customer orders. This trend is expected to partially unwind in the fourth quarter.

CP Kelco contributed £66 million in revenue following its acquisition in mid-November, adding to the group’s overall financial performance. The Primary Products Europe division, however, faced a 24% revenue decline, reflecting weaker market demand in that segment. Despite these fluctuations, Tate & Lyle remains focused on sustainable growth through Tate & Lyle growth initiatives and efficiency improvements.

Cash flow remained strong, reinforcing the company’s financial stability. In January 2025, Tate & Lyle successfully completed a £215 million share buyback program, returning capital to shareholders following the sale of its remaining interest in Primient. Additionally, the company secured $300 million and €275 million through a private debt placement to refinance the bridge facility used for the CP Kelco acquisition and for general corporate purposes.

For the fiscal year ending 31 March 2025, Tate & Lyle now anticipates revenue, excluding CP Kelco, to be slightly lower than previously forecast. EBITDA growth is expected to fall within the lower range of the 4% to 7% guidance, reflecting persistent market uncertainties.

How are geopolitical and market conditions affecting Tate & Lyle’s outlook?

While Tate & Lyle has demonstrated resilience, the company acknowledged that global economic conditions remain challenging. Geopolitical uncertainties, supply chain disruptions, and inflationary pressures have contributed to an uneven demand recovery. Although market conditions are broadly stable, the anticipated acceleration in demand for the second half of the financial year has not fully materialized.

The company recently renewed contracts for 2025, securing stable pricing and volume commitments despite competitive market dynamics. This renewal process, which includes both Tate & Lyle and CP Kelco, is expected to support revenue growth in the upcoming financial year. CEO Nick Hampton reiterated the importance of maintaining strong relationships with customers and optimizing operational efficiencies to navigate evolving market challenges.

What strategic initiatives are driving Tate & Lyle’s future growth?

Tate & Lyle’s long-term strategy is centered on driving Tate & Lyle growth through innovation and portfolio expansion. The CP Kelco acquisition represents a significant step forward in this strategy, enhancing the company’s ability to deliver differentiated food ingredient solutions that cater to evolving consumer preferences. The growing demand for healthier, tastier, and more sustainable food and beverage options presents opportunities for Tate & Lyle to leverage its expanded capabilities.

The company continues to focus on productivity improvements, with a five-year target of achieving $150 million in cost savings. Operational efficiencies, supply chain enhancements, and technology-driven innovations remain key priorities. The integration of CP Kelco is expected to further strengthen Tate & Lyle’s reformulation expertise, providing food and beverage manufacturers with advanced solutions for texture, stability, and mouthfeel.

With a presence in over 75 locations across 39 countries and a workforce of more than 5,000 employees, Tate & Lyle is well-positioned to capitalize on global growth opportunities. Its science-driven approach and commitment to sustainability align with industry trends favoring natural, plant-based, and functional ingredients.

What’s next for Tate & Lyle following Q3 results?

Despite short-term revenue challenges, Tate & Lyle remains confident in its long-term growth trajectory. The successful integration of CP Kelco, coupled with strategic contract renewals and a focus on innovation, positions the company for continued expansion. While external market conditions remain unpredictable, Tate & Lyle’s disciplined approach to financial management and operational efficiency supports its resilience.

As the company transitions towards operating as a unified business from April 2025, further synergies and revenue opportunities are expected to emerge. The emphasis on solutions-based customer relationships and ingredient innovation reinforces Tate & Lyle’s ability to navigate industry shifts while delivering consistent value to stakeholders.

With its strong heritage in ingredient innovation, Tate & Lyle continues to play a pivotal role in shaping the future of food and beverage formulation, driving advancements in health-conscious and sustainable ingredient solutions.