Tate & Lyle PLC – Trading and Strategic update

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Tate & Lyle issues the following routine trading update including comments on sweetener pricing negotiations and a statement on Western Sugar.

Current Financial Year

Underlying trading in the Group for the 9 months to 31 December 2001 has continued to be in line with plan and significantly ahead of the comparable period. This, together with delivery on our disposal programme, has enabled good progress to be made on reducing net debt.

Amylum has outperformed the previous period as has Staley, despite results from its citric product line where global oversupply has caused a further reduction in selling prices.

The sugar businesses have performed in line with our expectations.

In Mexico, the recent imposition of a discriminatory tax on soft drinks, against which opposition is mounting, will reduce profits at Almex. This will be partially offset by an improvement at Occidente, due to customers switching from High Fructose Corn Syrup (“HFCS”) to sugar.

The outlook for the Group for the second half-year remains positive and has not altered since the announcement of our interim results on 7 November 2001.

Sweetener Pricing Negotiations

In the past few weeks Staley has completed over 75% of those HFCS and sweetener contracts in the US that are renewed on a calendar year basis. Based on those contracts that have been agreed, we expect increases in average selling prices for calendar 2002 of 5 percent.

The European market has been competitive. Most of the contracting has been for periods of less than 12 months and Amylum has seen average sweetener and starch selling prices marginally reduced.

Western Sugar

The Rocky Mountain Sugar Growers Co-operative has been unable to secure financing, which meets the terms of our agreement, for its purchase of Western Sugar. The agreement for the sale has therefore lapsed. Whilst this is disappointing, Western is currently trading profitably and we expect results in the year ending March 2003 to be no worse than break even. Management will continue to examine ways to extract value from the business with disposal remaining our preferred option.

Outlook

The Group’s performance will benefit from the disposal in November 2001 of Domino Sugar, which made a loss before interest of £18 million in the six months to 30 September 2001.

We anticipate that the sweetener price increase in the US will lead to a further improvement in Staley’s performance in the financial year to March 2003.

At Amylum, a shift in contracted volumes to higher value added products is expected to offset weaker prices. The delivery of net integration benefits is expected to produce an improvement in performance in the financial year to March 2003. Progress on integration is on track to achieve our targeted gross savings of £50 million p.a. by financial year ending March 2004.

We continue to view the future with confidence.

About Tate & Lyle: 
Tate & Lyle is a global provider of solutions and ingredients for food, beverage and industrial markets.

Tate & Lyle operates through two global divisions, Food & Beverage Solutions and Primary Products, supported by the Innovation and Commercial Development and Global Operations teams. Food & Beverage Solutions is focused on growth by building leading positions globally in the categories of beverages, dairy, and soups, sauces and dressings. Primary Products is focused on delivering steady earnings and generating cash.

Food & Beverage Solutions consists of: Texturants, including speciality starches; Sweeteners, including low- and no-calorie sweeteners; and a Health and Wellness portfolio comprising mainly speciality fibres; and Stabilisers and Functional Systems, which are bespoke ingredient blends that ensure foods retain their structure.

Primary Products consists of high-volume sweeteners, industrial starches and fermentation products (primarily acidulants).  It also sells co-products from the corn milling process as animal nutrition.

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 2020, Tate & Lyle sales totalled £2.9 billion. For more information, please visit http://www.tateandlyle.com or follow Tate & Lyle on Twitter or Linkedin.