Tate & Lyle's promise boosts price

SHARES IN Tate & Lyle jumped 8 per cent to 402p yesterday when the company's new chairman, Sir David Lees, promised to turn around the company's fortunes following what he called an "unacceptable" year.

Reporting a 31 per cent fall in profits to pounds 167m for the year to September, Sir David said: "Last year was self-evidently disappointing for Tate & Lyle. Our aim is to ensure that 1997/98 represents the trough."

Brokers were encouraged by news that a much-delayed starch plant in Nesle, France, would be running at full capacity by early next year.

Sir David, formerly with the engineering group GKN, was appointed chairman two months ago after a difficult year for Tate which included a string of exceptional costs.

Income fell sharply because of narrow margins at the company's Staley subsidiary, which makes high-fructose corn syrup for use in soft drinks. This was compounded by a beet disease in North America, costing pounds 20m, and weak prices for starch in Europe. Confidence in the management was undermined by an incident known as the "Great Greek Grain Robbery", in which a Greek subsidiary delivered pounds 10m of grain but was never paid.

Simon Gifford, finance director, said the company was setting a new target for return on net operating assets of 15 per cent. He added: "The dividend will be maintained in real terms as an absolute minimum."

Analysts are now pinning their hopes on Sir David's influence. David Lang, of Henderson Crosthwaite, said: "These shares were completely clapped out... But the company is making the right noises to sort out the share price problem."