Tate & Lyle today (22 May) posted an 11% drop in full-year pre-tax profits as the group’s sugar unit reported an operating loss.
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Profits for the fiscal ended 31 March fell to GBP244m (US$482.3m), down from GBP275m last year.
Tate & Lyle’s international sugar trading division recorded a GBP9m operating loss against profits of GBP22m booked during the previous year.
The company warned that the sugar market is likely to remain “challenging” for at least the first half of the current financial year as surplus stocks are absorbed.
Looking to the second half of fiscal 2009, the sugar and sweetener company predicted that market equilibrium would return. Tate & Lyle said that this, coupled with actions taken at its sugar trading unit, should result in improved margins for its sugar business.
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By GlobalDataTate & Lyle said that its Splenda sweetener division is now fully invested, with profits rising 6%. However, the company said that the impact of the first full year of costs from its Singapore facility will dent profits in the first half. Nonetheless, sales growth is expected to offset costs and result in increased profits for the full year.
The food and industrial ingredients businesses in Europe and the Americas, which together account for 72% of group operating profit, posted mixed results. The Americas business saw a 13% rise in profit but in Europe the unit failed to meet expectations due to higher corn costs.
Looking to the coming year, Tate & Lyle said its food and ingredients businesses would make further progress. The company remained cautious about its European outlook, stating that results would be influenced by cereal prices.
Tate & Lyle also warned that fiscal 2009’s profits could also be hit by rising energy bills. The company predicted that energy costs could rise from GBP150m to GBP185m in the current year.
Commenting on the group’s progress, Sir David Lees, chairman, said: “We successfully achieved a number of steps to reshape our business in line with our strategy to build a stronger value added business on a low-cost commodity base. This reshaping process is largely complete and, taken together with some important changes in the management structure, the group is now well-positioned to benefit from the growth opportunities in our chosen markets.”
