Chairman’s Annual General Meeting and Interim Management Statement
This Interim Management Statement covers the period from 1 April 2010 to 30 June 2010 which is the first quarter of the financial year. Following the changes to our business announced on 27 May 2010, we have also published today on our website, www.tateandlyle.com, sales and operating profits under the Group’s new reporting segments as well as the Group’s new key financial performance metrics for the year ended 31 March 2010.
At the Annual General Meeting of Tate & Lyle PLC, to be held in London today, Sir Peter Gershon, Chairman, will make the following statement:
INTERIM MANAGEMENT STATEMENT
OPERATING PERFORMANCE – CONTINUING OPERATIONS
The Group has made a sound start to the financial year.
In our Speciality Food Ingredients division, demand patterns for speciality sweeteners and starches have remained steady. We have also continued to experience solid growth in sucralose sales volumes, and are now seeing the full benefits from the single plant sucralose manufacturing base.
Within Bulk Ingredients, corn sweetener volumes were somewhat above the prior year period, reflecting firm demand for HFCS in Mexico and the benefit of increased European capacity following completion of the expansion in Slovakia. Industrial starch performance in both the Americas and Europe was marginally lower, with weaker margins partially offset by higher volumes. Ethanol margins improved slightly, although markets have remained depressed.
SUGARS - DISCONTINUED OPERATIONS
On 1 July 2010, we announced an agreement for the sale of our EU Sugar Refining operations for cash consideration of £211 million and expect completion by the beginning of September 2010. The book loss on disposal, before costs, is anticipated to be approximately £55 million, subject to exchange rate movements and the timing of completion.
The Sugars division, including the other remaining businesses, principally Molasses and Vietnamese Sugar, which we have announced processes to sell, will be classified as discontinued in the Half Year Results to 30 September 2010. Operating profits from the Sugars division in the first quarter were in line with expectations.
Net debt of £787 million at 30 June 2010 has reduced from £814 million at 31 March 2010. The impact of exchange translation on reported net debt in the quarter was negligible.
In June 2010, we repaid bank debt of approximately £125 million in order to capture a future cash saving in interest of around £2 million. This repayment resulted in an accounting charge in the quarter of £6 million within net interest expense associated with the unwind of cash flow hedges, which will reverse over the period to maturity in June 2012.
In Speciality Food Ingredients, we expect a continuation of the steady demand patterns experienced during the first quarter.
In Bulk Ingredients, we expect the firm demand for corn sweeteners into Mexico to continue alongside the modest decline in US domestic demand, and stable demand in our other food markets. Despite some improvement in demand, industrial starch margins are expected to remain at lower levels, reflecting industry overcapacity, and we continue to see little near term improvement in US ethanol markets.
Overall, we continue to anticipate progress in the current full financial year.
A conference call will be held today at 8.00am BST, hosted by Javed Ahmed, Chief Executive and Tim Lodge, Chief Financial Officer. Participants are requested 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 555 566
Conference ID: 89160549
Replay dial in number: +44 (0) 1452 55 00 00
Replay passcode: 89160549#
A replay of this call will be available from two hours after the end of the live call for 7 days until 28 July 2010.