The Investment Column: Tate & Lyle
Friday 05 November 1999
The sugar industry over-invested earlier in the decade and there's now too much of the sweet stuff around, so Tate & Lyle has been pursuing a cost-cutting programme. At last, that's starting to bear fruit.
The closure of a wheat processing factory in Bordeaux and a sugar refinery in Brooklyn, New York, helped the company post pre-tax profits up 35 per cent in the year.
However, Larry Pillard, chief executive, confessed to making a small strategic error by choosing to hold sugar prices firm in the United States, prompting volumes to fall 10 per cent, with a resulting fall in market share.
The group warned that sugar prices in the US would remain depressed for the foreseeable future as a result of a bumper harvest.
Despite this, the group's Staley sweeteners subsidiary and its newly acquired citric acid operations made strong gains, helping the US operations boost profits 50 per cent.
In Europe, Tate's Amylum starch processing outfit - which eschews genetically modified raw material - made strong gains, benefiting from the absence of fresh start-up costs in the second half. The group is also seeing higher starch prices in Europe.
Not only is the group enjoying stronger cashflow, but Mr Pillard says he is only just starting to see the benefits of the cost-cutting. The momentum will accelerate as further costs are removed in all the group's businesses.
Analysts expect pre-tax profits of around pounds 240m and earnings of 35p per share this year, rising to pounds 311m and 45p in 2001. Mr Pillard is now proving his commitment to delivering shareholder value and the turnaround, still in its early stages, is starting to gather pace. The shares, up 27p at 427p, are good value.
- 1 Engineer pictured fixing plane's engine with 'duct tape' by concerned EasyJet passenger
- 2 Two-year-old says goodbye to bin man best friend
- 3 Saudi Arabia mosque bombing: Two volunteer security guards hailed as heroes for stopping Isis suicide bomber reaching worshippers
- 4 There is something wrong but very right about this Bible illustration
- 5 Remove smartphones from the hands of under-18s and maybe they will grow up to be less dumb
Engineer pictured fixing plane's engine with 'duct tape' by concerned EasyJet passenger
Saudi Arabia mosque bombing: Two volunteer security guards hailed as heroes for stopping Isis suicide bomber reaching worshippers
Ancient 2,400-year-old gold bongs discovered in Russia
Porn stars in California may be forced to wear goggles under new legislation
Tampon tax scrapped in Canada after petition convinces conservative government
EU referendum: David Cameron's rules are a 'democratic disgrace', says French-born Scottish politician set to be denied a vote
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
A nation of inequality: How the UK is failing to feed its most vulnerable people
Australian man punched in the face for defending Muslim women from abuse on train
David Starkey 'tells Amal Clooney to shut up and stop over-promoting human rights'
iJobs Money & Business
£30 - 35k: Guru Careers: We are seeking a Pricing Analyst to join a leading e-...
£20000 - £25000 per annum + OTE £45K YR1: SThree: At SThree, we like to be dif...
£20000 - £25000 per annum + competitive: SThree: Did you know? SThree is a mul...
£55 - 65k (DOE): Guru Careers: A unique opportunity for a permanent C# Develop...