Tate & Lyle has insisted that conditions in the EU sugar sector will improve in the second half of its financial year and boost margins from its refining business.
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Following Tate & Lyle’s AGM yesterday (23 July), the company told just-food that it is “increasingly confident” that conditions in the European sugar market will improve in the wake of EU reform of the sector.
“Our EU sugar business is operating in a very challenging market while the EU sugar regime undergoes reform. Surplus stock is being absorbed in anticipation of the first reduction in the EU reference price on 1 October 2008,” Rowan Adams, director of corporate communications, told just-food.
However, Adams said the outlook for Tate & Lyle’s sugar business is improving.
“We are increasingly confident that, during the second half of our financial year, market equilibrium between supply and demand for EU sugar will be restored, which should lead to progressively firmer refining margins,” he said.
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By GlobalDataAnother area of Tate & Lyle’s business facing difficult conditions is the group’s corn processing operations. With corn prices rising steeply, profits have come under pressure at the company’s North American and European ingredients businesses.
However, Adams remained upbeat, emphasising that high prices also mean higher selling prices for the corn by-products produced.
“By-product prices tend to move with the underlying commodities of corn and soya as these are the main substitute products for fibre and protein in compound animal feed. Whilst corn prices have reduced somewhat since June, they have been exceptionally high in recent months and so we have benefited from improved by-product returns,” Adams said.
