Tate & Lyle Delivers Encouraging Performance on Specialty Ingredients

Sales in the first half of the year increased by 4% to £1,348 million (flat in constant currency), with volume increases offset by lower average net corn costs and lower unit margins within Bulk Ingredients and lower sucralose selling prices within Speciality Food Ingredients.

Nov 5 2010 --- Tate & Lyle has delivered an encouraging performance in the first half of the year. In addition to good operational performance and steady demand growth in a number of our markets, the company reported benefiting from strong seasonal demand and improved co-product income as corn prices rose towards the end of the summer.

Sales in the first half of the year increased by 4% to £1,348 million (flat in constant currency), with volume increases offset by lower average net corn costs and lower unit margins within Bulk Ingredients and lower sucralose selling prices within Speciality Food Ingredients. Adjusted operating profit increased by 18% (13% in constant currency) to £170 million. Adjusted profit before tax increased by 27% (21% in constant currency) to £136 million while statutory profit before tax increased 131% to £104 million (121% in constant currency). Adjusted diluted earnings per share on continuing operations increased 31% (21% in constant currency) to 23.5p while statutory diluted earnings per share on continuing operations increased by 115% to 20.9p.

Speciality Food Ingredients delivered a strong performance with an increase in sales volumes of 7% and operating profits up 27% in constant currency. Bulk Ingredients delivered an improved performance with sales volumes up 14% and adjusted operating profits up 8% in constant currency. Average net corn costs in the six months were below the level of the comparative period. However, corn prices across the US and Europe rose towards the end of the summer and co-product income was above the comparative period. Net interest expense of £34 million was below the comparative period charge of £37 million. The charge within interest relating to post-retirement benefit plans was £2 million (£9 million in the comparative period).

Javed Ahmed, Chief Executive, said: “Tate & Lyle delivered an encouraging performance in the first half of the year. In addition to good operational performance and steady demand growth in a number of our markets, we benefited from strong seasonal demand and improved co-product income as corn prices rose towards the end of the summer. We have also now achieved the full benefits from the single plant sucralose manufacturing footprint. We continue to take the necessary actions to focus, fix and grow our business as we build the platform to deliver sustainable long-term growth”.

In Speciality Food Ingredients, Tate & Lyle anticipates that the steady underlying demand patterns experienced in the first half of the year will continue and, together with the full benefits of a single plant sucralose manufacturing footprint, expect good improvement in the full financial year.

In Bulk Ingredients, we anticipate that the firm demand for corn sugars into Mexico will continue alongside the modest ongoing decline in US domestic demand, subject to normal seasonal patterns. Despite some improvement in demand, the industrial starch markets remain under pressure. Industry utilisation has increased from the levels experienced a year ago. Against the backdrop of recent sharp increases in corn prices in both the US and Europe, the outcome of the upcoming calendar year pricing rounds will, as usual, influence performance in the final quarter of the financial year. “Tate & Lyle’s encouraging first-half performance underpins our confidence that we will make progress in the full financial year,” the company reported.