Tate & Lyle Profits Flat for First Half

The company also announced that John Nicholas, Group Finance Director, will by mutual agreement step down from the Board and leave the Company on 30 September 2008 following a short handover period.

18/09/08 Food and industrial ingredients group Tate & Lyle has said in a trading update for the six months ending 30 September 2008 that profits from the Group’s continuing operations in the first half year are expected to be in line with the corresponding period in the prior year.

The company also announced that John Nicholas, Group Finance Director, will by mutual agreement step down from the Board and leave the Company on 30 September 2008 following a short handover period. Pending the appointment of a new Group Finance Director, Tim Lodge, currently Director of Investor Relations, will assume the role of Acting Group Finance Director alongside his current duties.

Tate & Lyle said that at their Food & Industrial Ingredients, Americas division, the company continues to expect profits to be in line with expectations. Value added food and industrial ingredients again performed well achieving both volume and margin gains. The company benefited from the expansion of their Sagamore, Indiana value added plant. Liquid sweeteners continued to benefit from the modest margin improvements achieved in the 2008 calendar year pricing round.

The company said that the corn price has fallen to below US$5.50 per bushel from highs in June of almost US$8 per bushel, but it is still around a third higher than this time last year. It remains volatile given recent weather conditions in the USA. Current corn prices have improved industry fundamentals for the forthcoming US 2009 calendar year sweetener pricing round, although this has reduced the overall improvement in by-product returns that was captured in the first quarter.

At Tate & Lyle’s Food & Industrial Ingredients, Europe division, the corn wet milling operations benefited from improved co-product returns and falling corn costs, although the average net corn cost was higher than in the corresponding prior year period. The Food Systems businesses (Hahn and Cesalpinia) continued to perform well.

All EU sugar businesses, as widely reported, continue to operate in a very difficult market while surplus stock is absorbed against a backdrop of reducing institutional prices. Gas prices at their UK refinery have continued to be higher than expected. The company said they remain confident that, during the second half of the year, market equilibrium between supply and demand for EU sugar will be restored, which should lead to progressively firmer refining margins. The molasses business is again performing strongly, experiencing strong demand from customers despite lower EU cereal prices.

Sucralose sales volume growth has continued to be strong and consistent with their longer-term capacity utilisation target. Sales values increased at a lower rate primarily due to changes in sales mix. As previously highlighted, the results will include the incremental impact of a first full six months of costs associated with the Singapore facility, which was commissioned in June 2007. Looking forward, there are indications that the current economic climate is having an impact on the number of FMCG product launches, particularly in the USA.

The company reiterated that the general deterioration in global economic conditions coupled with the increased volatility in commodity prices, energy costs, and exchange rates make any statement about the outlook more than usually difficult. “Nevertheless the Board is confident that the Group currently remains on track to make progress for the year as a whole. The adverse impact from the commissioning of new technology at Loudon should be largely offset by improved profits elsewhere and by beneficial exchange rate movements,” the company said.