Tate & Lyle Says Outlook is Unchanged
The European market for sugar and related products has been affected by an oversupply of sugar, the company reported. The anticipated oversupply has also affected the company’s European cane refineries and sugar beet operations in East and Central Europe.
25/01/06 Tate & Lyle has said in a trading update that trading has continued to progress satisfactorily since 3 November 2005 and the outlook for the year to 31 March 2006 has not altered.
The expansion of its Alabama Splenda Sucralose facility and the construction of our new Singapore facility are on schedule, Tate & Lyle reported. The expanded Alabama facility is expected to commence commissioning in April, as planned, thereby doubling the capacity acquired in April 2004.
The company reported that the overall net result of the annual sales contract pricing rounds is that Tate & Lyle have achieved their objective of recovering next year's higher energy costs.
The European market for sugar and related products has, as stated in both its interim results announcement and the 25 November 2005 announcement regarding reform of the sugar regime, been affected by an oversupply of sugar. As expected, the calendar 2006 sweetener pricing round in the markets where Ingredients, Europe competes with sugar has been challenging. The markets for value added food ingredients and industrial starches have been more robust. After higher energy costs we expect in local currency terms total net margins for Ingredients, Europe to be below those achieved in calendar 2005.
The anticipated oversupply of sugar in Europe has also affected the company’s European cane refineries and sugar beet operations in East and Central Europe. The market pressure that Tate & Lyle previously highlighted has intensified in the last few months and this is expected to lead to a modest decline in earnings for Sugars, Europe in the balance of this financial year and a further decline in the year to March 2007.
Ingredients, Americas has substantially completed the negotiation of its calendar 2006 sweetener sales contracts. These contracts, as in previous years, are a mix of toll business (where Ingredients, Americas receives a fixed processing margin) and conventional supply contracts (where Ingredients Americas accepts risk on the price of corn, which it covers on the futures market). In calendar 2006 in local currency we expect to more than recover the higher energy costs. Tate & Lyle said that it anticipates achieving higher total net margins on value added food ingredients and other products.
Tate & Lyle announced on Monday that it had completed the acquisition of the US specialty food ingredients company Continental Custom Ingredients.
CCI was founded in 1975, with headquarters and primary operations in Sycamore, Illinois. It also has operations in Mexico and Canada. CCI is a recognised leader in dairy stabilisers and emulsifier systems and works closely with customers to develop ingredient systems for the North American market. CCI also has expertise in beverage flavours and vitamin and mineral fortification. CCI will now trade as Tate & Lyle Custom Ingredients.
D Lynn Grider, President of Tate & Lyle, Food & Industrial Ingredients, Americas said, “We are focused on delivering ingredient solutions to our customers and have identified the dairy industry as a key growth area. The acquisition of CCI enables us to advance these initiatives by bringing to Tate & Lyle new expertise in the areas of dairy stabilisers, hydrocolloids systems, emulsifiers, vitamins and flavours.
Additionally, CCI has an established sourcing network which will enable us to develop ingredient systems with an even broader range of functional food ingredients. CCI's dairy knowledge and blending operations compliment our fundamental ingredient technologies and operational efficiencies, enabling us to provide our customers with an even greater level of service and an increased range of innovative products.”
