Tate & Lyle Reports Encouraging Q1, Maintains Targets

In Europe, as anticipated, starch margins benefited from increased prices for industrial starches, although they were largely offset by sweetener margins which were lower because of higher raw material costs.

Jul 29 2011 --- Tate & Lyle has reported an encouraging start to the financial year, with a solid operational performance assisted by strong co-product returns, which were partially offset by the impact of currency movements on the translation of profits.

In their Speciality Food Ingredients division, overall volumes grew over the first quarter of the previous financial year, driven by solid demand for our corn-based speciality sweeteners and SPLENDA Sucralose. Plans to re-open the SPLENDA Sucralose facility in McIntosh, Alabama are proceeding in line with expectations. In Food Systems the company saw a continuation of tough trading conditions, particularly in Russia, and expect these to continue for the remainder of the year.

Within Bulk Ingredients, demand for liquid sweeteners remained firm in both the Americas and in Europe. In Europe, as anticipated, starch margins benefited from increased prices for industrial starches, although they were largely offset by sweetener margins which were lower because of higher raw material costs. Citric acid sales were lower than expected in a more competitive market, which we expect to continue for the remainder of the year.

In the first quarter, co-product returns benefited from higher market prices and the company locked in sales further forward than usual to take advantage of strong demand. "We still anticipate more normal co-product returns for the remainder of the year, especially when compared with the strong co-product performance in the second half of last financial year. Movements in co-products primarily affect the Bulk Ingredients division."

The Group’s financial position has continued to strengthen.

Net debt of £454 million at 30 June 2011 has reduced from £464 million at 31 March 2010. The impact of exchange translation on reported net debt in the quarter was negligible. During June, at their maturity, Tate & Lyle redeemed the US$300 million bonds from our own funds.

In June, the former owner of G.C. Hahn & Co, which makes up the majority of Tate & Lyle’s Food Systems operations in Europe, exercised their option to sell their remaining 5% shareholding to Tate & Lyle for a total cost of €8 million. As a result, Tate & Lyle now owns 100% of this company.

“We expect the current demand patterns for our main products in both Speciality Ingredients and Bulk Ingredients to continue. As planned, we are starting to diversify some US grind from Bulk Ingredients to Speciality Food Ingredients. Bulk sweetener volumes in the US are therefore expected to be slightly lower for the full year. Overall, our expectations for the full year remain unchanged and we continue to anticipate another year of profitable growth,” the company reported in a statement.