Upturn sweetens Tate profit to £159m

Tate & Lyle, the sugar and starch giant which has issued a series of profits warnings, is staging a recovery with lower debt and costs and better market conditions.

The company reported a pre-tax profit of £159m for the year ended 31 March, compared with a loss of £190m the previous year. On the underlying basis, it was a 41 per cent improvement on the previous year's profit of £113m. Larry Pillard, the chief executive, said: "I am pleased to report that our strategy of refocusing the group as a global leader in carbohydrate-based ingredients is beginning to deliver improved financial performance whilst building the foundation for future growth of the business."

Debt was driven down to £639m, from £963m in the previous year, cutting gearing to 59 per cent from 91 per cent. The company sold its loss-making Domino Sugar and Western Sugar over the last few months and the current financial year will see further benefits from these disposals. It is currently in talks to sell its molasses business. David Hallam, an analyst at Williams de Broe, said: "These results are a mixture of management getting more of a grip and a cyclical upturn. Put the two together and you get some good figures."

Although a recovery was expected, Tate & Lyle's results were even stronger than forecast. The company also put out a positive outlook statement and its shares closed 19p higher at 363p.

The group benefited from increased sweetener and starch margins, as the industry pulled out of its over-capacity problems. However, the high fructose corn syrup market in the US showed little growth again last year, reflecting flat levels of supply to the carbonated drink industry. The sugar performance was flat.

Sir David Lees, the chairman, said: "Assuming current economic conditions remain broadly unchanged, the impact of improved sweetener pricing at Staley, continued emphasis on cost reduction and the net benefits from the integration of Amylum enable us to view the current financial year with increased confidence."

After the scandal over Andersen's combined audit and consulting work for the collapsed energy giant Enron, Tate & Lyle said its auditors, PricewaterhouseCoopers, will be "excluded" from assignments not related to the audit function.