Tate hit by second warning on profits

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The Independent Online

Shares in Tate & Lyle slid yesterday after the world's largest sugar company warned that full-year profits would fall short of current expectations owing to worsening conditions in the US sugar market.

Shares in Tate & Lyle slid yesterday after the world's largest sugar company warned that full-year profits would fall short of current expectations owing to worsening conditions in the US sugar market.

Shares in the company, which have underperformed the food producers sector by more than 27 per cent so far this year, shed 12.75p to close at 271.75p after the profits warning - its second in just four months.

At the time of its annual year results in June, Tate had said it saw no sign of a recovery in the US sugar market.

"Group trading in the quarter just ended has proved this caution to be justified," chairman David Lees told the company's annual meeting yesterday.

Conditions in the US sugar market have worsened, after a better than expected April, and losses were running at a higher level than expected due to lower margins and reduced demand for speciality products. Profitability at Staley, the group's US unit, which makes sweeteners from maize and comprises around two-thirds of its US business, also deteriorated in the last two months. Trading in the rest of the group was in line with plan.

Tate said it now expected pre-tax profits before exceptional items for the first half of the current financial year would be below the £82m achieved in the six months to March 2000.

While the group expected profits to improve in the second half, they would not offset the first-half setback. Tate said that as a consequence, "we expect the results for the full year to March 2001 to fall short of current market expectations".

According to Barra Global Estimates, Tate had been expected to achieve pre-tax profits of between £196m and £230m for the year to 25 March, 2001.

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