Tate & Lyle's Performance 'In Line With Expectations' Despite Slowing European Trade

The company says that they delivered a solid performance in their third quarter ended 31 December 2011 with operating profit in line with their expectations and they believe that they remain on track to deliver a good performance for the financial year ending 31 March 2012.

Feb 9 2012 --- Tate & Lyle released their management statement, reflecting on the last year while also looking ahead to what 2012 holds for the group. The statement covers the period from October 1st 2011 to December 31st 2012.

The company says that they delivered a solid performance in their third quarter ended 31 December 2011 with operating profit in line with their expectations and they believe that they remain on track to deliver a good performance for the financial year ending 31 March 2012.

They state that they have achieved steady growth in Speciality Food Ingredients, although the rate of volume growth was lower than that achieved in the first half.

In corn-based speciality sweeteners and starches, they achieved good sales growth on higher volumes. Sucralose volumes grew but below the particularly strong levels seen in the first half. In Food Systems, they also delivered good sales growth with volumes in line with the prior year period.

Within Bulk Ingredients, North American liquid sweetener volumes continued to benefit from robust levels of domestic and Mexican demand. In Europe, higher sugar prices, which provide a reference price for isoglucose, enabled Tate & Lyle to increase liquid sweetener margins despite higher corn prices.

While industrial starch margins were ahead of the prior year, volumes were lower as demand softened from European paper and board customers reflecting the more uncertain economic environment. Towards the end of the period, US ethanol margins weakened on the back of lower prices in anticipation of the expiry of the blenders’ tax credit.

Following a strong first half during which Tate & Lyle was able to contract volumes further forward than usual, income from co-products reverted to more normal levels during the period. This compares with a strong performance from co-products during the third quarter last year.

Net debt of £410 million at 31 December 2011 was in line with 30 September 2011.

The group continues to maintain full silos given the continued tight corn supply. The majority of the corn they are purchasing to keep their silos full through to the end of the harvest year has been paid for in January and at higher prices than the prior year. As a result, and based on current corn prices and exchange rates, they currently anticipate that this will drive a net cash outflow in the final quarter of the financial year and continue to expect that net debt at the end of 31 March 2012 will be somewhat higher than the £464 million at the end of the last financial year.

The 2012 calendar year sweetener pricing round in North America for the Bulk Ingredients business is now substantially complete. This pricing round has been conducted against the backdrop of higher corn and process ingredient costs.

In North America, after recovering these higher input costs, Tate & Lyle achieved a modest increase in corn sugar unit margins reflecting a continuation of high levels of industry capacity utilisation on the back of robust domestic and Mexican demand. Bulk Ingredients sweetener volumes are likely to be broadly in line with calendar year 2011. In Europe, where they continue to contract over shorter periods to partially mitigate corn cost volatility, they have enhanced sweetener margins against a backdrop of higher sugar prices.

The statement concludes that: ‘The Group has performed well during the first nine months of the financial year. While we recognise the wider uncertainties in the global economy, we remain on track to deliver a good performance for the full financial year.’