Shares in UK sugar and ingredients company Tate & Lyle rose in early trade today (2 October) after the company announced that trading to 30 September continued to be in line with expectations, adding that it anticipated results ahead of those reported for the corresponding period of the prior year and reaffirming the company’s full year guidance.
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In a trading update issued this morning the company reported a strong start to the year despite challenging conditions.
In its Food & Ingredients, Americas unit Tate & Lyle witnessed a strong performance over most categories. Value added food and industrial ingredients, commodity sweeteners and ethanol all achieved both volume and margin gains, the company said. The resolution of a sweeteners trade dispute with Mexico, which will result the in free trade of US high fructose corn syrup into Mexico from the beginning of 2008, is good news in terms of the pricing round for 2007. The company said: “Our intention in those negotiations is to improve margins again.”
The performance of Food & Industrial Ingredients, Europe, was in line with expectations. Trading profits were modestly below the corresponding period of the prior year, the company said. However, this has been more than offset by lower depreciation as a result of the impairment charge taken in the year to 31 March 2006, the company pointed out. Higher cereal and energy costs were offset by increased prices for products. Good growth was achieved in value added food and industrial ingredients. Announcing preliminary results on 25 May, Tate & Lyle had indicated that trading profits for the division are expected to be significantly lower year-on-year in the second half-year of FY2006-7.
Tate & Lyle said that the doubling of Splenda production capacity in Alabama is mechanically complete while the construction of a new manufacturing facility in Singapore is on-track to be completed by January 2007. The company anticipates Splenda sales to remain strong, with sales growth weighted in the second half.
In Sugars, Europe, profitability has been hit by lower domestic sales prices. Meanwhile, in Sugars, Americas, the performance of the division is also below the corresponding period of the prior year.
“Overall, we have started the year strongly and our expectations for the full financial year to 31 March 2007 remain unchanged,” the company said. “We continue to view the future with confidence and remain committed to our target for the profit contribution from total value added products to increase by 30% in the year to March 2007.”
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By GlobalDataShares in the sugar and ingredients manufacturer increased by 2.57% in mid-morning trade today, rising to 738 pence.
