Tate & Lyle PLC
31 January 2002
TATE & LYLE PLC - Trading and Strategic update
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.
Enquiries: Mark Robinson 020 7626 6525
Chris Fox 020 7626 6525 (press)
Tate & Lyle is a global leader in carbohydrate processing. Our brands and high
quality ingredients add value to consumer products around the world.
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