Review prompts slump in Tate & Lyle results

Click to follow
The Independent Online
Larry Pillard, the new chief executive of Tate & Lyle, yesterday announced a slump in interim profits at the sugar group following a review of the business. Combined with a series of trading problems, the pre-tax total crashed from pounds 168m to pounds 30.4m in the 26 weeks to March.

Analysts were largely braced for bad news from the group, which warned in January that it would be hit by low prices for high-fructose sweeteners in the US and the strength of sterling. The shares fell 5.5p to 448.5p yesterday.

The main impact on the figures was an exceptional charge of pounds 83.2m following a series of write-downs at group businesses in the wake of the review by Mr Pillard, who took over in November.

He has instigated a pounds 29.9m reorganisation of the group's North American activities, including the Staley corn sweetener business he used to run, which has seen profits fall in the face of over-capacity and fierce competition in the industry.

Mr Pillard said the plan was to consolidate some of the service functions in Tate's five operations in the US, which had previously been decentralised. There would be redundancies in areas like head offices, but they would not be huge. The pounds 20m cash cost is expected to be recouped from savings within two years.

Other areas facing the knife are emerging market operations, where Tate is writing off pounds 34.9m in the first reduction in asset values since the development programme was initiated in 1990 amidst high hopes.

Political and economic problems in Eastern Europe have resulted in refining assets in Odessa in the Ukraine and in Bulgaria being written down. In China, similar difficulties with the government have caused a write off in a cane refining venture.

However, the group remains committed to emerging markets and Mr Pillard said operations through the Amylum joint venture in Bulgaria were expected to start again soon.

Mr Pillard said he had "taken a hard look at all the businesses". Operations which failed to beat the target of a 20 per cent return on assets could be disposed of over time, he suggested.

Comments