Tate & Lyle Sees Fiscal Year Operating Profit Below Last Year

U.K. sugar and food-ingredients producer Tate & Lyle said Thursday it expects operating profit for the full year to be marginally below the level reported in the previous year.

Profit has been hit by a higher interest expense resulting from an increased pension charge and accounting changes relating to its ethanol plant in Fort Dodge, Iowa in the U.S. The group has postponed the startup of the plant until market conditions improve.

Pretax profit for the nine months to Dec. 31, 2009, before the impact of exchange translation, was in line with expectations, but the third quarter was marginally below expectations, Tate & Lyle said in a trading update.

The third quarter benefitted from a weak comparative period last year, when T&L suffered from large-scale destocking by its customers. The company disappointed the market in May last year when it announced plans to mothball a factory in McIntosh, Alabama, which makes its artificial sweetener Sucralose.

The company said that the 2010 sweetener pricing round in the Americas will be below the level achieved in the 2009 calendar year.

The pricing round is held every winter and determines prices for T&L's sweeteners for the forthcoming year. Prices are dependent on demand and supply as well as the price levels of alternative products.

"After taking into account lower input costs, including net corn costs, overall sweetener margins in the 2010 calendar year within the Americas are expected to be somewhat below the 2009 calendar year," it added.

Sucralose, which trades under the name Splenda, was a key plank in previous CEO Iain Ferguson's project to turn T&L into a "value added" food company rather than a food commodities business. Demand for the product has been weaker than originally hoped, however.

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