At the Annual General Meeting of Tate & Lyle PLC in London today,
Sir David Lees, Chairman, made the following statement on current trading:
At the announcement of the Group’s results on 7th June I said that our immediate priorities were to complete the disposals of Western Sugar and Domino Sugar and to improve the performance of Amylum.
The sale of Western to the Rocky Mountain Sugar Growers Co-operative, also announced on the 7th June, remains subject to the Co-operative completing their financing arrangements.
The conditional sale of Domino Sugar announced last week is in line with the assumptions made when the accounts for the year to 31 March 2001 were finalised. Completion is conditional upon, inter alia, the buyers completing their financing and US competition authority approval, which may take several months.
The level of losses sustained in the first quarter of the financial year in US sugar has been higher than in the comparative period to June 2000 and shows no immediate signs of abating.
In most of the ongoing activities of the Group, including Amylum, underlying trading in the first quarter of the financial year has been close to or has exceeded plan. The main exception has been Staley’s Citric Acid division, where pricing levels have been adversely impacted by Asian imports. We have intensified our cost reduction efforts, including the recently announced 40% reduction in the workforce at our Mexican facility. Price increases at Staley and Amylum announced on 6 February 2001 have had a beneficial impact on results. Energy costs have stabilised, albeit at higher levels than in the comparative period.
The profit before tax, exceptional items and goodwill amortisation of the Group, excluding US sugar, for the first quarter was in line with the profit in the comparative period.
In the outlook paragraph in my statement in the Annual Report I said that we had reasons to view the current year with greater confidence. Given the underlying trading to date and progress on strategic issues, that view remains unchanged.
In conclusion, may I remind you of the three elements of our core strategy. They are:
To continue to develop higher margin and higher growth carbohydrate-based products, building on the Group’s technology strengths in our global starch business.
To continue to rationalise our portfolio of assets and ensure that all retained assets produce acceptable returns. We will divest businesses that do not contribute value creation or which no longer fit with the Group’s strategy.
To continue to drive out costs in our aim to become the low cost producer in all the markets we serve.