The Investment Column: Outlook sours for Tate & Lyle
Thursday 07 May 1998
Turnover, earnings and margins all fell in the six months to February. Profits dropped one-third to pounds 77m and retiring chairman Sir Neil Shaw warned full-year earnings will be "substantially down" on last year's pounds 241m.
Tate and Lyle has proved more accident prone than most over the last few years. The latest lean period is blamed on a bewildering array of new dilemmas. A strong pound, which has reduced overseas profits by pounds 6m. Disease in the Nebraska beet crop, at a time when the rest of the US was enjoying large crops and low sugar prices, and continuing problems at the state of the art starch plant in northern France added to the group's woes. To top it all, it has been left to count the cost of a pounds 10m order of grain in Greece which the group paid for but never received.
Tate & Lyle is taking steps to drive down costs, dispose of under-performing bits and appoint new directors, including an acting chairman to replace Sir Neil. It has paid $219m (pounds 312m) for the food ingredients division of Haarman & Reimer, which will make Tate & Lyle the only global producer of citric acid. But, inevitably, this will not enhance earnings until next year.
The group has won US approval for sucralose, a promising new sweetener. But that will not impact on the bottom line for at least two years as it awaits EU approval. Meanwhile, prices for its fructose products are at last recovering. But profits will fall before they start to recover.
Analysts yesterday slashed full-year forecasts from pounds 230m to pounds 170m, and profits the following year from pounds 300m to pounds 250m, putting the shares on a prospective p/e ratio of 17 then 13. The shares, which fell 24p to 460p yesterday, remain a hold on hopes that, if the group cannot sort out the disastrous performance, a rival may be tempted to come in and sort out the mess.
- 3 Alton Towers crash: Four seriously injured and 16 guests trapped as Smiler ride carriages collide
- 4 Ann Summers survey reveals the UK's favourite sex position
Man on naked bike ride gets ejected after becoming aroused
Caitlyn Jenner's mother Ester thought her daughter, formerly known as Bruce Jenner, had transitioned for money
Charles Kennedy 1959-2015: A gifted, compassionate politician whose career was cut short by the 'demon drink' - latest news
Alton Towers crash: Four seriously injured and 16 guests trapped as Smiler ride carriages collide
Charles Kennedy dead: A guy once asked the Lib Dem leader who his favourite Muppet was and his letter response was wonderful
Thousands of teenage girls enduring debilitating illnesses after routine school cancer vaccination
Migrants in Kos: Photos show real tragedy after Brits abroad complain of 'awkward' holidays
British tourists complain that impoverished boat migrants are making holidays 'awkward' in Kos
Michael Gove determined to scrap the Human Rights Act – even if Scotland retains it
Threat to scrap Human Rights Act could see UK follow Nazi example, warns UN official
Church of England 'one generation away from extinction' after dramatic loss of followers
iJobs Money & Business
£30000 - £35000 per annum: Recruitment Genius: The UK's fastest growing, multi...
£70000 - £90000 per annum: Recruitment Genius: A Financial Reporting Manager i...
£23000 - £25000 per annum: Recruitment Genius: They win lots of awards for the...
£13500 - £20000 per annum: Recruitment Genius: This nationwide enforcement com...