18th Sep 2008 07:01
Tate & Lyle PLC TRADING UPDATE Tate & Lyle issues the following trading update for the six months ending 30September 2008 ahead of the announcement of the interim results on Thursday, 6November 2008. In light of the Board change announced earlier today, we havebrought forward this update by a few days. Iain Ferguson, Chief Executive, said: "The Group continues to tradesatisfactorily. We expect profits from the Group's continuing operations in thefirst half year to be broadly in line with the corresponding period in the prioryear and our own expectations." TRADING UPDATE FOR THE SIX MONTHS TO 30 SEPTEMBER 2008 At our Food & Industrial Ingredients, Americas division, we continue to expectprofits to be in line with our expectations at the time of the July InterimManagement Statement. Value added food and industrial ingredients againperformed well achieving both volume and margin gains. We benefited from theexpansion of our Sagamore, Indiana value added plant. Liquid sweetenerscontinued to benefit from the modest margin improvements achieved in the 2008calendar year pricing round. As stated in July, we are incurring some additional costs in commissioningpatented new technology at the Loudon, Tennessee corn wet mill. As we ramp-upour increased capacity, we are pleased with the cost improvements demonstratedby this new technology, which will have long-term economic and environmentalbenefits for this plant. Achieving full output, however, is taking longer thananticipated and the plant is currently running at 75% of targeted capacity. Someadditional equipment has been ordered which, when installed in October 2008 andMarch 2009, should lead to output levels reaching 85% during the third quarterand 100% by the end of the financial year, respectively. The profit impact inthe first half year is expected to be £15 million, which has been largely offsetby improved profits elsewhere, particularly in by-product returns. At currentcorn prices, a further £10 million to £15 million of profit impact is expectedduring the second half of the financial year. Construction of the new corn wet mill in Fort Dodge, Iowa is progressingsatisfactorily and the experience we have gained in working with the newtechnology at Loudon increases our confidence that this new plant will meet itstargets. The corn price has fallen to below US$5.50 per bushel from highs in June ofalmost US$8 per bushel, but it is still around a third higher than this timelast year. It remains volatile given recent weather conditions in the USA.Current corn prices have improved industry fundamentals for the forthcoming US2009 calendar year sweetener pricing round, although this has reduced theoverall improvement in by-product returns that was captured in the firstquarter. At our Food & Industrial Ingredients, Europe division, the corn wet millingoperations benefited from improved co-product returns and falling corn costs,although the average net corn cost was higher than in the corresponding prioryear period. The Food Systems businesses (Hahn and Cesalpinia) continued toperform well. All EU sugar businesses, as widely reported, continue to operate in a verydifficult market while surplus stock is absorbed against a backdrop of reducinginstitutional prices. Gas prices at our UK refinery have continued to be higherthan expected. We remain confident that, during the second half of the year,market equilibrium between supply and demand for EU sugar will be restored,which should lead to progressively firmer refining margins. The molassesbusiness is again performing strongly, experiencing strong demand from customersdespite lower EU cereal prices. Sucralose sales volume growth has continued to be strong and consistent with ourlonger-term capacity utilisation target. Sales values increased at a lower rateprimarily due to changes in sales mix. As previously highlighted, the resultswill include the incremental impact of a first full six months of costsassociated with the Singapore facility, which was commissioned in June 2007.Looking forward, there are indications that the current economic climate ishaving an impact on the number of FMCG product launches, particularly in theUSA. The preliminary non-binding decision by the administrative law judge in ourpatent infringement action in the US International Trade Commission (ITC) isexpected on 22 September 2008, with the subsequent review and formal decision bythe full ITC within four months of the judge's decision. NET DEBT Net debt at the end of August 2008 was £1,149 million compared with £1,041million at 31 March 2008. The effect of movements in exchange rates since 31March 2008 was to increase net debt by around £75 million. OUTLOOK FOR THE YEAR TO 31 MARCH 2009 As we stated in July the general deterioration in global economic conditionscoupled with the increased volatility in commodity prices, energy costs, andexchange rates make any statement about the outlook more than usually difficult.Nevertheless the Board is confident that the Group currently remains on track tomake progress for the year as a whole. The adverse impact from the commissioningof new technology at Loudon should be largely offset by improved profitselsewhere and by beneficial exchange rate movements (note 1). Note 1: we assume a £:US$ exchange rate of 1.85 in translating profits for thebalance of the year END A conference call will be held today at 8.00am BST, hosted by Iain Ferguson,Chief Executive and Tim Lodge, Director of Investor Relations. Participants arerequested to dial in at least 5 minutes before the commencement of the call.Dial in details are as follows: Participant dial in number: +44 (0) 1452 586 513 (UK freephone 0800 694 1503) Conference ID: 65098256 Replay dial in number: +44 (0) 1452 550 000 (UK freephone 0800 953 1533) Replay passcode: 65098256# A replay of this call will be available from two hours after the end of the livecall for 7 days until 24 September 2008. For more information contact Tate & Lyle PLC: Rowan Adams, Director of Corporate Affairs (Media) Tel: 020 7626 6525 or Mobile: 07713 067542 Tim Lodge, Director of Investor Relations Tel: 020 7626 6525 or Mobile: 07798 837317 About Tate & Lyle: Tate & Lyle is a world-leading renewable food and industrial ingredientscompany, serving a global market from over 50 production facilities throughoutthe Americas, Europe and South East Asia. Our efficient, large-scalemanufacturing plants turn agricultural products, corn and cane sugar, intovaluable ingredients for our customers. These ingredients add taste, texture,nutrition and increased functionality to products that millions of people aroundthe world use or consume every day. Tate & Lyle's range of leading branded food ingredients includes SPLENDA(R)Sucralose, PROMITOR(TM) Dietary Fiber, STA-LITE(R) Polydextrose, Tate & LyleFairtrade Sugar and Lyle's Golden Syrup. Tate & Lyle also produces brandedindustrial ingredients including Bio-PDO(TM), Ethylex(R) and STA-Lock(R) paperstarches; and staple ingredients such as high fructose corn syrup, sugar,ethanol, citric acid and basic starches. In addition to providing a wide rangeof ingredients our expert sales and product applications teams support customersby providing technical advice and proprietary consumer insight studies. Tate & Lyle is listed on the London Stock Exchange under the symbol TATE.L.American Depositary Receipts trade under TATYY. In the year to 31 March 2008,Tate & Lyle employed 6,488 people in its subsidiaries and joint ventures, andsales totalled £3.4 billion. http://www.tateandlyle.com. SPLENDA(R) is atrademark of McNeil Nutritionals, LLC Copyright Business Wire 2008Related Shares:
Tate & Lyle