Davy sees 'muted' outlook at Tate & Lyle

27th May 2014 12:26

The outlook for sugar and sweetener maker Tate & Lyle remains 'muted' following a challenging 2013/14, according to Davy Research which retained an 'underperform' rating on the stock.Ahead of the company's announcement of its results for the year-end March on May 29th, Davy said it expects adjusted profit before tax to total £323m, down from £327m the year before, in line with consensus forecasts. It also predicts another small fall in the bottom line next year but noted that recent sterling-dollar rates could impact profits even further."Earnings growth prospects deteriorated at Tate over the course of the year as softer US demand and competition in the sucralose market weighed on profits," said analyst Jack Gorman."Forecasts already factor in a small decline in 2014/15 numbers, and this still looks to have some downside bias. Engineering a rebound in growth, without compromising return-on-invested-capital or dividend prospects, offers a pathway to re-rating."The shares were down 1.4% at 671.01p by 12:38 on Tuesday.BC