LONDON (Alliance News) - Sweeteners and starches maker Tate & Lyle PLC Thursday said its operating profit for the year just ended will be lower, as sweetener volumes in both of its divisions were held back by a soft US beverage sector.
In a trading statement on February 13, the group had said that adjusted pretax profit for the third quarter came in lower than expectations, as volume and sales growth in its SPLENDA Sucraclose sweetener remained in line with first-half levels and its expectations. The company had warned that impending price declines were expected to hit full-year results.
Shares in the company plummeted at the time of the warning, as the firm cut its full-year pretax profit expectations to flat profits for the current year, due to prices for its SPLENDA Sucraclose falling by more than previously expected in the final quarter, and by another 15% in the next financial year.
Tate & Lyle said Thursday that it still expects its adjusted pretax profit for the year ended March 31, at constant exchange rates, to be broadly in line with the previous year.
"We estimate that the impact of exchange translation will be around 1% negative on our adjusted profit before tax of GBP327 million reported in the year to March 31, 2013" the company said in a statement on Thursday.
The British-based multinational agribusiness said Thursday that within its Speciality Food Ingredients division, strong volume growth in emerging markets and Europe continues to be partially offset by the US.
"As expected, operating profit growth in this division has been held back by the more competitive market for SPLENDA Sucralose," the company said.
Within Bulk Ingredients, Tate & Lyle said that it still expects its operating profit for the full year for the division to be lower than the previous year, again as a result of a soft beverage season in the US, which it said reduced demand for liquid corn sweeteners, and produced lower returns from co-products.
"The protracted severe cold weather in the US has also held back the performance of this division somewhat in the final quarter, despite the actions taken by our manufacturing and supply chain teams who succeeded in partially mitigating the full impact of this on our operations," the firm said.
Tate & Lyle said that the payment for new crop corn held in its silos resulted in a net cash outflow in the final quarter of the year, meaning that its net debt at March 31 is higher than the level reported at the end of December.
Commenting on Tate & Lyle's trading statement Thursday, analysts at Jefferies said the statement was "short and about as sweet as it expected".
Tate & Lyle said that it will announce its full year results on May 29.
Shares in Tate & Lyle were trading 1.1% lower at 643.34 pence Thursday morning.
By Rowena Harris-Doughty; rowenaharrisdoughty@alliancenews.com; @rharrisdoughty
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Tate & Lyle (TATE)