Tate & Lyle’s Profits to be Marginally Lower

The trading patterns experienced during the first half year have continued, although the Group’s performance in the third quarter was marginally below expectations, before the impact of exchange translation, due principally to lower industrial sales volumes in Food & Industrial Ingredients, Americas.

28 Jan 2010 --- Tate & Lyle PLC has said in a trading update that the Group’s profit before tax for the nine months to 31 December 2009, before the impact of exchange translation, was in line with expectations.

The trading patterns experienced during the first half year have continued, although the Group’s performance in the third quarter was marginally below expectations, before the impact of exchange translation, due principally to lower industrial sales volumes in Food & Industrial Ingredients, Americas. Sucralose, Food & Industrial Ingredients, Europe and Sugars each performed in line with expectations in the quarter. As expected, Sugars delivered improved margins following the final institutional price change on 1 October 2009.

A strong focus on cash management has continued, and net debt at 31 December 2009 was £864 million, a further reduction of £123 million during the quarter. This improvement was due to strong free cash flows from continuing operations, driven principally by continuing reductions in working capital throughout the business.

On 25 November 2009, the company issued £200 million of 6.75% 10-year bonds, with the proceeds used to refinance existing debt, including the repurchase of £100 million of bonds maturing in 2012, thereby lengthening our average maturity of gross debt to 5.3 years.

The 2010 calendar year pricing rounds at the company’s Food & Industrial Ingredients businesses in the Americas and Europe, which have been conducted against the backdrop of the lower demand have seen following the economic downturn, are now substantially complete.

Sweetener selling prices in the Americas for the 2010 calendar year will be below the level achieved in the 2009 calendar year. After taking into account lower input costs, including net corn costs, overall sweetener margins in the 2010 calendar year within the Americas are expected to be somewhat below the 2009 calendar year.

The company said it expects to report operating profit for the full year marginally below the level reported in the comparative period. “We continue to expect the reported net interest cost in the 2010 financial year to be higher than the comparative period due to an increase in charges related to post retirement benefit plans and the suspension of interest capitalisation in respect of the Fort Dodge, Iowa plant while final completion is postponed,” the company said.

“We will continue to build on the good progress we have made to date in strengthening the Group’s balance sheet through reducing costs and optimising both working capital and capital expenditure,”the statement concluded.