After a sharp decline in profits from its sucralose business, and to forward the company’s plans to transition to a global specialty food ingredients player, global agribusiness Tate & Lyle has announced a significant restructuring for the company.
Within a year the company has issued three profit warnings with the latest being issued in February 2015, as increasing competition from Chinese sucralose suppliers undercut its prices as the company was struggling to deal with falling sugar and oil prices.
In response, the company is moving all of its sucralose production to its Alabama plant and is closing its Singapore operations by the spring of 2016. The move will incur a one-time cost of US$188.47 million, but will mean that its sucralose division will break even within the first fiscal year, and should return to making a profit by March 2017.
The company is also exiting its bulk ingredients facilities it owns in partnership with Archer Daniels Midland (ADM) in Bulgaria, Turkey, and Hungary, but will acquire full ownership in a specialty ingredients plant it co-owns with ADM in Slovakia. The company is naming ADM as the exclusive agent for the ingredients produced from the Slovakia plant, and for production from its wholly-owned wet corn mill in The Netherlands, while Tate & Lyle will be named as the distributor of the ingredients produced at the plant in Turkey, enabling it to continue to supply crystalline fructose to its European customers. Upon completion of the deals, Tate & Lyle will receive US$259.95 million
In the end, the restructuring will bring the company’s Splenda sucralose business back to profitability and increase its sustainability, while streamlining the company’s focus.
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