DJ Tate & Lyle Pretax Pft In Line With Last Yr

LONDON, Jul 23, 2008 (Dow Jones Commodities News via Comtex) -- TATYY | Quote | Chart | News | PowerRating -- Edited Press Release

Tate & Lyle said Wednesday that it has made a satisfactory start to the financial year with profit before tax for the continuing operations in the first quarter broadly in line with the equivalent period in the prior year.

Group net debt at June 30, was GBP967 million compared with GBP1,041 million at Mar. 31.

The Chairman Sir David Lees said at the Food & Industrial Ingredients, Americas division, the company benefited from improved by-product returns driven by volatile and exceptionally high corn prices, which have reduced since the end of June.

"These were partially offset by some additional costs as we commission new technology at the Loudon, Tennessee corn wet mill", he said.

Food & Industrial Ingredients, Europe's improved co-product prices compensated for higher energy prices.

The Food Systems businesses (Hahn and Cesalpinia) continued to perform well.

Sucralose sales volume growth was strong and consistent with the capacity utilisation targets, he said.

As anticipated, sales values increased at a lower rate. Higher energy costs were offset by efficiency gains.

The Singapore facility was commissioned in June 2007, and so the first quarter of the current financial year includes the impact of a full quarter of costs associated with this new plant, Lees said.

The E.U. sugar businesses, as has been widely reported, are operating in a very difficult market while surplus stock is absorbed in anticipation of the first reduction in the E.U. reference prices which will take place on Oct. 1, (when the raw sugar reference price will also reduce).

Gas prices at the U.K. refinery have been higher than expected, further validating the investment in the biomass boiler which will be commissioned at the end of the current financial year ending March 31, 2009.

"We are increasingly confident that, during the second half of the financial year, market equilibrium between supply and demand for E.U. sugar will be restored, which should lead to progressively firmer refining margins", he said.

On July 2 the company announced the sale of the international sugar trading business to Bunge.

The approvals required have now been obtained and the sale is unconditional, he said.

As already announced, the working capital in the business will remain with, and be collected and paid by, Tate & Lyle through to March 31, 2009 at which point it will be assumed by Bunge upon final completion of the transaction, lees said.

At March 31, the net operating assets attributable to the business being sold had a value of GBP106 million and related primarily to working capital.

The business sold reported an operating profit of GBP4 million for the three months, which compares with a loss of GBP6 m for the six month period ended Sep. 30, 2007 and with a GBP9 million loss for the year to Mar. 31,, the chairman said.

The results of international sugar trading have now been reclassified into discontinued operations.

As a consequence the sale will have an impact on the comparison of the continuing operations profits with the equivalent period in the prior year in both the first and second half years, he said.

The disposal of international sugar trading increases the tax rate of the continuing operations as this business contributed to earnings in the U.K.

"Given these factors and the performance of U.K. sugar refining, we would now anticipate a tax rate for the full year in the region of 31% for the continuing operations, Lees said.

The general deterioration in global economic conditions, particularly in the U.S. and specifically in raw materials and energy, makes any statement about the outlook more difficult than usual, he said.

Nevertheless, with three months of the financial year behind and with three of the four divisions having started the year in line with expectations, the company is on track to make progress for the year as a whole.

(END) Dow Jones Newswires

07-23-08 0228ET

More News:   Market Updates | Stock Alerts | All Trading News | Stock Index