Tate & Lyle to close Greek plant

13/01/06 Tate & Lyle announces today a proposal to close its corn wet milling plant in Thessaloniki, Greece by September 2008. The proposal to close this plant has been communicated to the Tate & Lyle European Works Council, Local Works Council and employees, and will be the subject of consultations over the coming weeks.  On closure, Tate & Lyle would continue to service its customers in the Greek market from its other plants in the EU.

This proposed closure is due to the reform of the EU Sugar Regime, which regulates the production and prices of sugar and isoglucose.  The new Sugar Regime comes into effect in July 2006 with the target of significantly reducing sugar production quotas and cutting the sugar reference price by 36%.  This will directly reduce the profitability of isoglucose and other grades of glucose produced in Thessaloniki. Unlike sugar processors, who see an almost corresponding percentage reduction in the price that they pay for sugar beet, there will be no reduction in the price of maize for the production of isoglucose. As a result, the Thessaloniki plant would be driven into a loss making position.

Clive Rutherford, Chief Executive of Tate & Lyle Food & Industrial Ingredients, Europe said “It is with regret that we announce this proposal.  Despite the considerable progress made in recent years, it has not proved sufficient to offset the inherent cost structure of the plant, which arises from the high cost of local maize and the plant’s small scale (necessitated by the restricted local market).  These factors make the plant highly vulnerable to the consequences of the EU reform and whilst the plant may be able partially to absorb the negative impact of the reform during the early period of the new Regime, possibly up to September 2008, after that time we expect that the plant would no longer be viable under the Regime”.