Tate & Lyle trades ‘satisfactorily’ in first half year

The departure of group finance director John Nicholas prompted Tate & Lyle to release its trading update for the first six months of 2008 earlier than anticipated last month.

CEO Iain Ferguson said the group continued to trade satisfactorily’ during the six months to 30 September, and added that profits from continuing operations in the first half year were expected to be broadly in line’ with the corresponding period in the prior year. This was in line with Tate & Lyle’s own expectations.
During the first half of the year, profits at the group’s Food & Industrial Ingredients, Americas Division were adversely impacted by additional costs of around £15 million associated with the commissioning of new patented technology at its Loudon, Tennessee corn wet mill, which is currently running at about 75% capacity. Full capacity output is not expected until the end of the financial year. Construction of a new wet corn mill in Fort Dodge, Iowa, was progressing satisfactorily’, said Ferguson, adding that corn prices in the US remained volatile, and the EU market for sugar businesses was very difficult’. However, Ferguson remained confident that during the second half of the year, market equilibrium between supply and demand for EU sugar would be restored, which should lead to progressively firmer refining margins.
Looking forward, Ferguson noted that the current economic climate appeared to be having an impact on the number of FMCG product launches, particularly in the US. He added that the general deterioration in global economic conditions coupled with the increased volatility in commodity prices, energy costs, and exchange rates made any statement about the company’s outlook more than usually difficult’. Nevertheless, he concluded, “The board is confident that the group currently remains on track to make progress for the year as a whole.”

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