Tate & Lyle's (TATYF) CEO Javed Ahmed on Interim Management Statement Call Transcript

Jul.27.14 | About: Tate & (TATYF)

Tate & Lyle PLC (OTCQX:TATYF) Interim Management Statement Conference Call July 24, 2014 2:30 AM ET

Executives

Javed Ahmed - Chief Executive

Tim Lodge - Chief Financial Officer

Analysts

Warren Ackerman - Societe Generale

Catherine Farrant - JPMorgan

James Targett - Berenberg

Martin Deboo - Jefferies

Harold Thompson - Deutsche Bank

Jeremy Fialko - Redburn

Alicia Forry - Canaccord Genuity

Charles Pick - Numis

Operator

Good morning, ladies and gentlemen and welcome to the Tate & Lyle Q1 Interim Management Statement Conference Call. My name is Dave and I will be your coordinator for today’s conference. For the duration of the call, you will be on listen-only. However, at the end of the call, you will have the opportunity to ask questions. (Operator Instructions)

I am now handing you over to Chief Executive, Javed Ahmed, to begin today’s conference. Thank you.

Javed Ahmed - Chief Executive

Thank you, operator. Good morning and welcome to this morning’s call. With me is Tim Lodge, our CFO. You will have had a chance to read our statement by now. So, let me start by summarizing the main themes. We had a challenging quarter as we had to address two issues, which impacted our business and which are one-off in nature. The first was the anticipated impact of the long and severe winter in the U.S. and the second was an unexpected shutdown of our sucralose facility in Singapore.

Let me now deal with each of these in turn. As you will remember in May, we highlighted the winter in the U.S., which caused operational difficulties at the corn plants and led us to enter the current financial year with much lower inventories than usual. We expected that the issue would be contained within our bulk ingredients business. However, as we went through the quarter, it became evident that depleted inventories were an industry wide issue and market supply was very tight with other suppliers unable to pickup the shortfall. Consequently, we had to adapt our plans and balanced reduction in order to best meet our customers’ needs and this moved some of the impact on to specialty food ingredients. We have now put the supply issue behind us and inventories are beginning to normalize.

Turning then to the Singapore shutdown, following an industrial accident, production at our facility was temporarily suspended while the local authorities conducted the investigations and it remained shutdown for a longer period than we originally anticipated. We incurred £3 million of costs to resolve issues caused by this unexpected stoppage. During the quarter, there was limited production and customer orders were largely met from inventories. As a result, fixed manufacturing costs of £8 million were expensed and reduced profits for the quarter, but these were reversed in the second half of the year. We also brought forward and will extend the running time at our McIntosh facilities in the U.S., although this had limited impact in the quarter due to the normal lead times. Both plants are now running with Singapore returning to normal production levels.

So, to summarize the outlook for the year, demand continues to be strong and notwithstanding current market conditions for sucralose, for the full year, specialty food ingredients is expected to deliver volume growth above the wider specialty food ingredients market. Overall, the Group full year performance before the impact of exchange rate movements is expected to be broadly in line with our previous guidance.

And with that, Tim and I would be happy to take your questions.

Question-and-Answer Session

Operator

Thank you. (Operator Instructions) The first question is from the line of Warren Ackerman from Societe Generale, London. Please go ahead, Warren.

Warren Ackerman - Societe Generale

Good morning, Javed. Good morning, Tim. Just a question on the full year guidance, you are talking about it still being kind of broadly in line with your previous guidance. Could you just walk through maybe, Tim, just the kind of moving parts second half on first half? And when you say broadly, could you maybe just firm up what you mean exactly by that comment?

And then just secondly on sucralose, I mean, in the last quarter, Javed, you sounded very positive about various factors, which would actually maybe even accelerate the growth in sucralose. Obviously the lower pricing you talked about, the increased tabletop initiatives now that the relationship with McNeil had ended and there have been some reports of big contract wins potentially. So Yoplait Light was one that was mentioned where they are switching from aspartame to sucralose, I know I am not expecting you to comment on particular customer orders, but there was a feeling that if anything kind of sucralose volumes would actually maybe even accelerated. So, the commentary the sucralose is still lower than you had expected even given the issue that you flagged in Singapore is pretty disappointing in my view, so I was just wondering if you could address that. And then just finally, Javed obviously when you look at the Exco you are now losing sort of three people from that, you have Karl Kramer has gone, I know you have Karl has been replaced obviously Tim and now Oliver Rigaud your Head of SFI, I mean you have three pretty key Exco members, is that a concern for you?

Javed Ahmed

Tim do you want sort of take the first one, then I will step in.

Tim Lodge

Sure. Good morning Warren.

Warren Ackerman - Societe Generale

Good morning Tim.

Tim Lodge

On the full year guidance, the thing that we will sort of stick with us through the year is going to be the £3 million of sort of one-time costs in Singapore sucralose plant. Those are primarily we had to sort of clean things out, write off some intermediate production etcetera because of the longer stoppage than originally planed. So that sort of will flow through the whole year. The other things in Singapore as we said in the statement they reverse over the year. The other ups and downs that you would always expect are sort of in the roundings I think at the stage of the year. The other issue that is slightly in the – it’s in the footnote on the – in the statement is the impact of the stronger sterling, that’s for the full year impact using the rates at end of June which are quite similar to current rates, it comes in as around £24 million reduction because of that. So in constant currency the only real issue is the £3 million Singapore issue.

Warren Ackerman - Societe Generale

What were you saying previously on sterling Tim compared to prepare the £24 million now?

Tim Lodge

Well, we were when – if I can just refer to the consensus we were talking about dollar rate of 1.67 and around 1.71, but the £24 million is just based year-on-year. So if we take last year’s results and we retranslate them at the current rates, you will get a year-on-year change of ₤24 million.

Warren Ackerman - Societe Generale

Okay.

Tim Lodge

So, just to put that in context of how much stronger sterling is this year than last assuming the rates in place today run for the rest of the year. You talked about that first half, second half mix that the sort of key issue is going to be on sucralose and the things that have happened in quarter one which won’t wash out in the first half. So that ₤8 million of reversing fixed cost, most of that will reverse in half two. So, there will be a distortion between half one being lower and half two being higher from that point of view. And the sort of cold winter issues were primarily quarter one and therefore half one so again that will distort the mix half one and half two as well.

Warren Ackerman - Societe Generale

Okay.

Javed Ahmed

Warn let me pick up on your next two questions on – the first one being on sucralose and that is the underlying situation in sucralose really from our point of view has not changed from when we spoke to you in May. In terms of the newly gained access to table top sector aspartame replacement I think is becoming a trend that we are seeing. And then the underlying growth just continues based on the calorie reduction and the health and wellness trends we have talked about before. Yes, we are winning new business and the issue – the reason for the slightly below expectations in the quarter is a very specific one and that is very large customer changed their order pattern. Now we have had a chat with these guys in detail and based on what we can see so far it’s not an issue for the full year. So the full year our guidance this long-term, this is a mid to high-single digits growth business that remains intact. And so far we have not seen anything between the quarters which would sort of say to us otherwise at the moment, if that changes obviously we will update you.

That said I think the market remains pretty dynamic I mean you know we are going very aggressively after new business. But in instances where someone else wants to behave completely irrationally in a way which we think is absolutely no value to be had at all. Well, we just won’t get in their way. We will go ahead and let them do that, but otherwise, the underlying health of the business, underlying sort of outlook, because based on all the factors that you have just highlighted, so I am going to repeat, that has not changed. So, the full year guidance that we are looking at long-term this is a – and for the year sort of mid to high single-digits is nothing today that I see that is getting us to change our mind. If that changes obviously, we will update you, but not today.

Warren Ackerman - Societe Generale

Okay.

Javed Ahmed

And the third question that you had around Exco, the three people that you mentioned, it’s all really any management team evolves and these are all sort of very different reasons here as well. And the only thing that I should point out, we have got very clear successions planned that you would expect us to have both the Board and us as an Exco. And this is something which in some cases has been planned. With Olivier specifically, he has got a great opportunity and I wish him well on that, but underneath him over the last couple of years, we have put a very, very strong bench. So, I feel very comfortable that I am in no particular rush or feel any artificial pressures to have to fill a gap or anything. He has a very strong I would say cadre of general managers under Olivier today. So, nothing here that is a huge surprise really and it’s all part of natural evolution. And the succession plans are very clearly in place here and we review them with the board, we review them with Exco very regularly.

Warren Ackerman - Societe Generale

Okay, thank you.

Operator

The next question is from the line of Catherine Farrant from JPMorgan in London. Please go ahead, Catherine.

Catherine Farrant - JPMorgan

Good morning. Thank you. I have just got a couple of questions. The first is on the SFI business, if we look at that sort of putting sucralose to the side for the moment and you have talked about good underlying development that’s ahead of the market. Could you just clarify whether you are talking about the volume development there and what role pricing might be playing as we have the lower corn price I would imagine starting to filter through here, just really interested whether that’s kind of a volume or a sales comment? And then if we – you mentioned with the investments that you are making sort of mitigating some of the restrictions that you have had on the supply chain in future, is there anything that you can kind of comment on specifically regarding your plans there? I know obviously at the start of the year, there was not a huge amount you could say, I am just wondering if there is any update there? Thank you.

Javed Ahmed

Catherine, your first question on the SFI business, the underlying business is very healthy. We are very encouraged by the strong demand, that’s no different than when we spoke to you in May. The emerging markets continued to pull very strongly, good double-digit growth continues over there. I am talking about volume just to be clear on this one.

Catherine Farrant - JPMorgan

Right.

Javed Ahmed

And the corn prices obviously there is going to be a sales impact as we do the corn price pass-through, but the two things we obviously look at are unit margins and the volume and both of those are in a healthy share at the moment. It was held back by supply, as you said. And most of that really impacted largely the supply issue, the U.S., our U.S. operation most of the effect was felt over there. And so even the U.S., we saw growth in the U.S. not just at the level that we had expected on that business. But in terms of the investments that we are making, a large part of the investment is actually going into or extending our specialty starch facilities, both in the U.S. and in the Netherlands because you know we shared these plants. If we put on the extra SFI kind of capacity finishing legs, which is what we are doing, it just takes the sort of gives us more flexibility in terms of when we do have to make trade-offs versus the BI SFI, which in some instances we have to in quarter one as you see. But that will – yes, that will help alleviate and give us much more flexibility in the future. Just I should point out these things don’t come online obviously in six months, you are talking about 18 to 24 month projects here.

Catherine Farrant - JPMorgan

Okay, very clear. Thank you.

Operator

The next question is from James Targett from Berenberg, London. Please go ahead, James.

James Targett - Berenberg

Good morning, everyone. Two questions from me. Just firstly on the FFI, I wonder if you can comment on European volumes. You mentioned the U.S. and emerging markets. Just wonder what you are seeing in Europe? And then on the bulk division, again could you sort of quantify or give some guidance about as to what volume development actually was in the first quarter? You said obviously the impact was less than you are expecting and I was wondering what that meant for the quarter and obviously for the full year outlook? And then I guess it relates to bulk as well, if there is any comments on the Mexico situation? Thank you.

Javed Ahmed

Right, yes. Our European volumes we saw growth in Europe, slightly above market growth in Europe. So, Europe was in good shape on the SFI side, specifically on that question. I am not quite sure I followed your second question properly. James, could you just repeat that, you are talking about BI volumes. Is that correct?

James Targett - Berenberg

You said that – yes, just what difference in volume developments in the first quarter was in bulk following the weather impact?

Tim Lodge

Let me cover that, James. The EU was a pretty normal type of growth in the quarter. Again, we don’t get into the sort of giving you the stats quarter-by-quarter, but there is nothing there really. Yes, the issue was in the U.S. manufacturing base. So, the impact was primarily felt in the U.S., but obviously we supply Asian and Latin American businesses from the U.S. too. On the BI side, as we talked about before if you remember this time last year, we had a cold winter in the U.S. Even with the cold spring in the U.S., even with the cold winter this year, actually volumes were up slightly on the same period last year in the U.S. as we expected and that helped mitigate the slightly lower unit margins that we also talked about at the time of the pricing round. So, that was a little bit lower than expected, it was still the trend that we had expected. And elsewhere in BI in Europe, obviously a lot of that is quite of a constraint that was pretty similar year-on-year. Does that answer the question?

Javed Ahmed

Yes, just to be clear, James. On the first question that you had on the SFI volumes is what I was commenting on and that in Europe where we saw good growth out of that slightly above market, I would say, in Europe.

James Targett - Berenberg

That’s great. Just on the bulk, obviously at the full year, you were expecting bulk profits to be significantly down obviously due to lower unit margins and the weaker first quarter. I was wondering if your expectations for the full year for bulk have really changed significantly after the first quarter?

Tim Lodge

The only thing that’s really changed on that, James, is a little bit of left pocket, right pockets. We told you that all of the impact on the cold winter would be in bulk, actually that split more evenly as the same sort of total, but it’s split more evenly between bulk and specialty for the reasons we talked about earlier. That’s the only change in the bulk outlook.

James Targett - Berenberg

Okay. And is there any sort of change in the environment in Mexico in terms of exports or the impact from the regulations?

Javed Ahmed

No, we are not seeing anything meaningful, nothing certainly in the last couple of months since we saw you, James. We continue to sort of get – we pickup that the sugar tax is having a consumption impact somewhere in the sort of the mid to high single-digits. My personal opinion is I think we need to wait out for another six months to sort of see where that settles down, so but nothing changed. If anything Mexico, if you look at the Mexican sugar and U.S. corn equation, that seems to be going more in the U.S.’ favor now, because the sugar crop they are expecting in Mexico, the next one is still good, but certainly not nowhere near the record 7 million tons of last year and with the U.S. corn prices coming down, that equation is beginning to look better from a U.S. HFCS, which goes down their point of view?

James Targett - Berenberg

Okay, that’s great. Thank you very much.

Operator

The next question is from Martin Deboo from Jefferies in London. Please go ahead, Martin.

Martin Deboo - Jefferies

Hi, morning gentlemen. Can I just ask two disconnected questions? Javed, just picking up on your commentary on Mexico just now the other factor going on is we are hearing this ITC case on alleged dumping by Mexican sugar is due to resolve in August and any feeling as to what the outcome of that might be would be helpful? Another minor one for you, Tim is just the debt position fell quite healthily. I am not (indiscernible) enough with the way quarterly balance sheet works to know if that’s just an FX translation effect or whether cash flow was particularly good in the quarter? Thanks.

Javed Ahmed

Martin, on your question on the ITC case, there my understanding – our understanding is that, that is trying to be resolved between without resorting to sort of antidumping duties. So where that ends up, I think obviously it’s going to be political negotiations I can’t obviously give you anymore commentary on that. But my suspicion is that what we are going to end up possibly with is maybe stop short of antidumping action, perhaps get some sort of a negotiated settlement on some sort of quarters coming this way. But as I have said that’s all under negotiation but that is the latest information that we have.

Martin Deboo - Jefferies

Okay, thank you.

Tim Lodge

But Martin, on the debt, about a quarter the debt reduction is due to the movement in exchange. Quarter one we normally have a bit of inflow, quarter two we get the big dividend payment. In quarter three and four where we are buying corn and refilling those inventories again. So typically half one is sort of cash-in half and typically quarter one. So there is nothing particularly unusual in the quarter and exchange was about quarter of the movements since the year end.

Martin Deboo - Jefferies

Okay. Thank you.

Operator

We do have question from Harold Thompson from Deutsche Bank in London. Please go ahead Harold.

Harold Thompson – Deutsche Bank

Yes. Good morning, everyone. Just to follow-up on ingredients, I mean you say that the volumes are likely to be ahead of the wider ingredients base, do you still refer as 4% being your estimate of ingredients volumes that’s what you are seeing ahead of that, I guess you are saying more than 4% and if that’s the case, can you just give us a bit of a flavor of which product groups are driving that. The second point is before this sucralose hit of £3 million, you had basically guided for ingredients profits to basically be broadly flat and given what we know what’s happening in the sucralose profit pool that by default imply that your ingredients profits would be up mid or high teens, can you elaborate as to why the non-sucralose profits in this financial year are going to perform so strongly. And then finally there was, I am sure you noticed, you are saying in your statement that the pricing moves in sucralose are pretty much matching your expectation, but there are some reports that maybe that’s having the desired effect of kicking out some players, is there anything you can say on this last point? Thank you.

Javed Ahmed

Right. On the ingredients, yes Harold, the base that we use the reference is a broader underlying market growth of 4% to 5%. So we expect to be ahead of that. In terms of what’s specifically driving it, it is pretty broad-based for us. Actually, we are looking at growth across our texturants, across our fibers and across our specialty sweeteners. And we continue to see which we have again seen in this quarter as well, a very strong growth coming out of the emerging markets, good double-digit growth continues from there. So nothing – it’s not particularly skewed. It is pretty broad-based and that’s good underlying momentum and the demand is healthy as opposed to skewed to one particular category or one particular customer or one particular geography or anything like that.

Your second question in terms of the £3 million hit of – because of the Singapore issue, I just want to be clear. We had going in anticipated we would get flat profits in – in sort of broadly in-line profits with last year on SFI. Now we are expecting somewhat less because two reasons really at the £3 million that you just talked about, also the Q1 supply-related hit, which is now divided more between BI and SFI as complete – as opposed to completely sort of taken up by BI which was the original anticipation. Now as Tim said, that’s a little bit left pocket, right pocket because that doesn’t change our overall guidance because BI goes up by sort of the similar amount. But SFI is now going to be a slightly sort of behind based on that equation. The rest of the business continues to grow at good trajectories I mean you know they are good margin businesses. As the volume growth continues to come through this is still very much the best guidance that we can give you at the moment.

Harold Thompson - Deutsche Bank

I think maybe you misunderstood my question. I was simply saying that before today’s incremental news on the sucralose profit hit and a slight difference in phasing from the known supply issues in the U.S., you were guiding for flat profits or broadly stable profits in ingredients for the financial year ahead. And given what we know has happened to the sucralose profit pool, which clearly will have significantly fallen on the back of the price cuts, well, there must have been offsets for that for the overall division to be broadly stable. And the only conclusion one can draw is that your other ingredients would have delivered an incredibly strong profit performance in this financial year. And I just want you to just help me answer why those other ingredients are likely to show such strong profit growth?

Javed Ahmed

Two reasons really, Harold, I think on that. One is – and that’s the underlying basis for that assumption, is the following that the volume growth continues to be inline with our expectations, which are above market expectations. And so far that’s other than the U.S. in the first quarter, as you know, we seem to be seeing that. The second as you know as we went through the pricing round, we did pickup some unit margin on the underlying the non-sucralose specialty corn-based business as we manage to hold on to some of the price – corn price which was coming down. So, those are really the two underlying dynamics. And Tim, do you want to sort of add anything else to that?

Tim Lodge

No. I mean, it’s really across the range, across the globe. And yes, we have been making smaller investments to make sure we have got capacity to maintain growth, but yes, it’s just the regular business gaining some traction. There are some new lines in the fiber world, for example, that are coming larger segments as are the emerging markets. And those are the areas which are higher growth. So, the beginnings will be a little bit more meaningful as they weight the average up a bit, but generally, it’s across the board. There is no one product, one area. And let’s not forget, particularly last year, we did see some impact from the weather on the SFI business. So, there is a – it helps to have a comparator like that when you are looking at growth year-on-year.

Harold Thompson - Deutsche Bank

Okay, so basically a very strong year. And just on my final question on the sucralose, your strategy of price cuts seems to be – you seem to be getting the pricing which you had guided to, but comments as to capacity withdrawals?

Javed Ahmed

That’s harder to comment. I mean, you are reading all the stuff that we are reading in the press here, Harold, I am sure, but – and what we are reading is that, as I said there is really no surprise to us. It’s a competitive market, it’s dynamic. And as I said, we are moving very aggressively in that market to the extent that’s having some impact on some players and what impact it’s having, it’s harder to say. But clearly, what we are seeing is some pretty irrational pricing.

And as I said, if we don’t think there is any value to be created, we will let just someone else go and get that. And at some point, I just don’t see that as sustainable. But I think it’s still a bit – we are still in the peak of it at the moment. And I think this thing is going to start perhaps becoming a little bit clearer in the 6 to 12 months, but it’s still a bit hard to comment, because I suspect it’s related to the overhang in the market. It’s still pretty irrational behavior. And once that starts clearing up, I think we will get a better idea of what the landscape looks like.

Harold Thompson - Deutsche Bank

Okay, thank you very much.

Operator

We now have a question from Jeremy Fialko from Redburn in London. Please go ahead, Jeremy.

Jeremy Fialko - Redburn

Hi, good morning. Jeremy Fialko of Redburn here. Really just a few questions on the SFI volume growth situations and the first thing is on the quarter in question, it sounds as though you would have been somewhere little bit below the sort of 4% to 5% market rate, if I am not mistaken maybe in the 3% to 4% range? And then would you be expecting to make – effectively makeup some of the shortfall from Q1 over the balance of the year, i.e., some ability to sort of slightly overproduce to makeup the shortfall and satisfy the demand? And then the second question is do you think that there is actually going to be some sort of constraints on your SFI growth over the next 18 to 12 months as the new capacity comes online or do you think it’s a case of the year this was just a real one-off issue because of the weather and the way you have to satisfy the customer orders? And therefore even while you are in the process of putting this new capacity online, you should be able to grow very healthily in SFI? Thanks.

Javed Ahmed

Let me take those in turn, Jeremy. The SFI volume growth was, as I said, very healthy. We saw good growth in Europe, good growth in the emerging markets. It was held back by – even though we saw growth in the U.S. volume growth, it was less than we had planned and less than there was demand for. So, in other words, we could have gotten more growth out of the U.S. on that. For the full year, we expect as I said, the growth to be above the wider underlying market growth of 4% to 5%. So, clearly, there is – we expect to be seeing some makeup on that as we go through the year. And that really should be more of the same in Europe and the emerging markets without any supply constraints. And I will come to that in the second.

The U.S. demand should be – we have also seen good demand in the U.S. And right now, we are pretty much shipping everything that we are making. I mean, the plants are running very hard. We are shipping literally straight off the factory on to trucks here at the moment. I think this is a one-time issue because of the low inventories we went in with into Q1. We know Q1 is usually a big demand quarter both for BI and for specialty sweeteners because of the beverage season, particularly in North America. And that’s where effectively we have to – we have some constraints on that. As we bring on the capacity the next 18 months to 24 months, it should certainly ease things. It will give us more flexibility. But I wouldn’t say that we feel we would be constrained without that capacity. I think we have got enough. And obviously that’s been part of our planning, that we can still be – the same set of assets can still deliver good, strong, above market SFI growth for the next 18 months to 24 months assuming the demand that we are seeing right now continues.

Jeremy Fialko - Redburn

Okay, thanks a lot.

Operator

We now have a question from the line of Alicia Forry from Canaccord Genuity, London. Please go ahead, Alicia.

Alicia Forry - Canaccord Genuity

Hi, good morning. I wanted to ask about this comment that you mentioned in the statement about having to balance production to best meet our customers’ needs, which to me suggests a choice. And it sounds like the choice is made to honor some demand in bulk ingredients at the expense perhaps of some SFI customers. I was just curious kind of what without sort of going into too much detail and because I know you can’t with your customers, but just sort of what were the – what was the rationale behind taking such a decision?

Javed Ahmed

Right. That decision is not that simple, Alicia, because the plants are integrated and yes, we had to balance some production and meet some choices, because – and a lot of the customers as you know, we actually share. We share these customers between BI and SFI. So, it could be the same customer we are shipping to. And we have to make some choices as you said where some customers, we have to support them through what was also a pretty difficult time for them, simply because it wasn’t just us who were short on inventories, it was broadly an industry issue. So, nobody could step in and makeup some of that shortfall. So, we – where we felt we really needed to support some customers and that is a priority. We had to make some tradeoffs. But strategically we will always make the tradeoff, which goes into our planning of growing our strategic growth engine, which is SFI, but in some cases you need to just make sure that you are there for your customers as and when they need them. As I said, some of them are shared customers.

Alicia Forry - Canaccord Genuity

Okay, thank you.

Operator

We now have a question from the line of Martin Deboo from Jefferies in London. Please go ahead, Martin.

Martin Deboo - Jefferies

Javed, it’s a very quick follow up actually to Jeremy’s question, actually is just where do you think front end grind utilization is in U.S. corn wet milling at the moment?

Javed Ahmed

It’s very high. We don’t obviously, Martin, give out any specific numbers right now. It’s very high for us. As I said, we are hand to mouth – we are shipping everything we are making at the moment. Anything we can we are putting into stock to try and rebuild inventories. But the plants are running very, very well and very hard.

Martin Deboo - Jefferies

And Javed, do you think it’s a transient effect as everybody catches up on cold winter, or do you think that underlying capacity is in reasonably good shape as well?

Javed Ahmed

I think, Martin, I think underlying capacity is generally in good shape. But it’s harder to comment on that. I mean I am not sure I can give you that much more color at this stage overall.

Martin Deboo – Jefferies

Okay.

Javed Ahmed

Tim, do you have anything to add to that.

Tim Lodge

No, not really. I mean it’s the same place, it would really specific question is normally trying to look forward into what supply demand looks like for calendar year ‘15 and it’s a bit early to say on that. But there are no sort of structural changes to any of the markets. You have asked the question on Mexico already. There is nothing else that would change the balance particularly year-on-year.

Martin Deboo – Jefferies

Okay. Thank you for that. It’s very useful. Thanks.

Operator

Well, we do have a question from Charles Pick from Numis in London. Please go ahead.

Charles Pick - Numis

Good morning, gentlemen. Thanks very much. I wonder if you can confirm please, what the date was of the industrial accident at the Singapore facility and also confirm that there was no loss of sales whatsoever because of the point you made about supplying from inventory. And when will it be fully back to normal production in Singapore. And also I wonder if you could elaborate a bit more on this large customer order pattern change that developed for sucralose in the quarter? Please.

Javed Ahmed

Right. The accident, Charles, was in April, at that point and it was part of – it was a very short planned maintenance downtime in April and that’s when the accident occurred. And we had planned to bring the plant back on, if there hadn’t been obviously any incident there fairly quickly, because these are short shutdowns and we don’t take the plants down completely at that point. In this case with the extended shutdown we actually have to take it down. And when you actually bring these plants back p, you are not talking days here. These are not simple plants. They take weeks to come back. On your – it is normal production now. We are running very close to normal production at the moment. So over the last few weeks it’s gotten back up and we ramped it back up to normal production. So I would say we are back already.

Yes, there were no loss of sales because of the plant we have very clear business continuity planning in place. And we carry inventory for exactly that reason. So there was no loss of sales which we can attribute to that incident at all, so just for clarity sake. The order pattern that we are talking about for a major customer it is seems to be with them as we have had a deep discussion with them, a phasing issue from their point of view. So for the full year we are not really looking at any major deviations in terms of what they expect to be sourcing from us. But from a quarter – quarterly point of view, yes we have seen a deviation. And actually as I look at this month I think they are following through on what they have said.

Charles Pick - Numis

Right, okay. Thanks very much. And just a sort of follow-up on the earlier question about the grain diversion away from SFI towards BI in the first quarter to meet some of their customer requirements, is there any indication of what the cost of that could have been given that you make so much superior margins on the SFI?

Tim Lodge

It’s really in the roundings. It’s – you are right, but if I can go back to the statement I made earlier and you can see how the consensus moved when we talked about the cold winter back in May, the cold start, that – roughly 50-50, instead of 100% of that going to bulk 50 of that is – about 50% of that’s specialty food ingredients. What you are going to see is a small marginal impact on that. But as I said earlier, it’s kind of in the rounding of things that go up and down at the stage of the year.

Charles Pick - Numis

Okay, right. Thanks very much.

Operator

(Operator Instructions) Thank you. At the moment, we have no further questions. So I will hand you back to your host. Thank you.

Javed Ahmed - Chief Executive

Great, thank you operator. And thank you all for joining the call this morning.

Operator

Thank you for joining today’s call. You may now replace your handsets.

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