Tate & Lyle Performance Similar to Estimates, Sells Ethanol Facility
Within Bulk Ingredients, sweetener volumes remained strong and margins improved in industrial starches, particularly in Europe where the market has tightened following a poor potato harvest.
3/31/2011 --- Tate & Lyle has reported in an encouraging performance through the year with operating performance similar to market expectations, except that corn price rises drove a further increase in co-product income in the final quarter, in its statement on entering the close period.
“We have continued to deliver global volume growth in Speciality Food Ingredients across all the major product categories through the year. Within Bulk Ingredients, sweetener volumes remained strong and margins improved in industrial starches, particularly in Europe where the market has tightened following a poor potato harvest. The higher co-product income primarily benefits the Bulk Ingredients division,” the company reported.
Tate & Lyle has now (March 30, 2011) sold its ethanol facility at Fort Dodge, Iowa to Cargill for a cash consideration of US$57 million (£36 million). Following the impairment taken in the year to 31 March 2010, which took the book value of the facility to £17 million, and after additional costs of approximately £3 million, the sale leads to an accounting gain on disposal of around £16 million. Additionally, £20 million of the £25 million exceptional charge booked in the first half of the current financial year in respect of long term contracts relating to the facility will be reversed. Thus Tate & Lyle expect an exceptional credit of £36 million in the second half of the current financial year and an exceptional credit for the full year of £11 million. The sale crystallises tax losses of around £65 million, the bulk of which the company expects to recover in cash over the coming two financial years; the reported tax rate will not change as a result of the sale as a deferred tax asset was booked at the time of the impairment charge.
As discussed at the half year results and again at the Interim Management Statement in February, working capital demands on the business have been increased by our decision to keep Tate & Lyle’s US silos full in response to the anticipated tight supply situation running up to the next harvest. In February, the company expected that net debt at 31 March 2011 would be at a similar level to that reported at 30 September 2010. With the sale of Fort Dodge, accordingly the company now expects the year end net debt to be lower.
