Tate & Lyle 20% profit fall

Tate & Lyle, the sugar refiner, has issued 3 profit warnings this year, however, the maker of the sweetener Splenda, implied that it may go on the acquisition trail in the European sugar industry.

The group said it expected consolidation in the European Union sugar industry after reforms to the sugar regime were fully implemented in 2010. The group expects to be a part of this and added it is taking the necessary steps to ensure that the sugars business is optimally structured to take advantage of the opportunities that await.

Yesterday, the sugar giant revealed a 20% fall in half-year profits and the profit warning sent Tate shares down by 30% and led to a chorus of calls for chief executive Iain Ferguson and finance director John Nicholas to go. However, Mr Ferguson said the board has said it has total confidence in the management team. We have said all along that this year would be a year of transition with difficult management issues.

Shares in the company have plummeted 44% during 2007 and analysts said it was likely the company would be bumped off the FTSE 100 index when it goes through its quarterly reshuffle at the end of 2007.

The group posted underlying pre-tax profits of £120 million for the 6 months to 30 September, down from £149 million. The weak dollar and the group’s old core sugar commodity market were to blame said Ferguson.

The group now anticipates profits for the full year to come in at £240 million against £281 million in the year to last March. Ferguson said he signalled that after getting good visibility on costs after earlier-than-expected sweetener pricing rounds for 2008.

Tate & Lyle concluded by saying the 2008 financial year is proving to be more challenging than expected at the beginning of the year but the group is confident that their strategy to concentrate on their value-added business leaves them in a good position to create value for shareholders in the coming years.

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