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 Porn block in India: hundreds of sexual websites banned, internet outraged
- 3 Gamers confess the worst things they've done in The Sims
- 4 Sex with robots will be ‘the norm’ in 50 years
- 5 Barack Obama turns 54: US President's best put downs to celebrate his birthday
Jackie Chan climbs to second place in Forbes' Highest Paid Actors list after magazine includes actors working outside US movie industry
Malaysia issues arrest warrant for Gordon Brown’s sister-in-law after she publishes stories on leader Najib Razak's financial affairs
Gwen Stefani and Gavin Rossdale divorce: One of music industry’s most enduring couples announce split after 12 years of marriage
Giant Minion terrorises drivers in Ireland as 40ft inflatable blocks traffic on Dublin road
Dutch King Willem-Alexander declares the end of the welfare state
Is Britain really full up? Are migrants taking our jobs? Leading academic answers the most common anti-immigration claims
Calais Migrant Crisis: Deputy Mayor of Calais labels Cameron's use of 'swarm' as 'racist' and 'ignorant'
Chris Leslie: Jeremy Corbyn's anti-austerity agenda will harm the poor, says Labour shadow Chancellor
Landlords renting properties to illegal immigrants to face up to five years in prison
While we fixate on Calais, the Home Office is quietly deporting dozens of migrants on 'ghost flights'
Labour leadership race: Jeremy Corbyn could be the next Prime Minister, says Ken Clarke
iJobs Money & Business
£35 - £50k DOE: Guru Careers: A Tax Manager / Accountant (ACA / CA / CTA) is n...
£35000 - £37000 per annum + benefits: Ashdown Group: Contracts Executive - Cit...
£20000 - £25000 per annum + OTE £45K: SThree: SThree Group have been well esta...
£21000 per annum: Recruitment Genius: This is an exciting opportunity to join ...