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Food and drink sweetens Tate result

8 November 2009 2,168 views No Comment

Tate & Lyle has said its first-half performance was better than expected after sales to food and drink customers held firm.

The sugar and ingredients business reported a 7% rise in half-year revenues to £1.82 billion, while adjusted operating profits reduced 1% to £148 million.

Tate said it traded slightly ahead of expectations in the first half, despite challenging conditions in a number of its markets.

In its food and industrial ingredients businesses in the Americas and Europe, Tate said the order patterns of its food and beverage customers appeared to have been re-established, albeit at slightly lower levels.

However, industrial starch, US ethanol and US animal feed markets remain under pressure.

Including exceptional costs of £55 million relating to the mothballing of a sucralose plant in Alabama, pre-tax profits fell 59% to £50 million.

The steady performance came as a relief to investors after last year’s run of profits warnings, caused by factors such as the weak US dollar, lower sugar prices after EU reforms and higher European corn costs.

Tate has concentrated on its “value added business” which includes ingredients for food such as soups, sauces and dressings. It is also in the process of moving all sucralose production to Singapore in a bid to protect margins.

Analysts highlighted a 15% rise in volume sales of the sugar-free sweetener Splenda as encouraging.

Martin Deboo, of Investec Securities, said: “This better-than-expected result makes us fell more positive about sucralose as production migrates to Singapore and the business faces generic competition.”

Copyright © 2009 The Press Association. All rights reserved.

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