| LONDON, Nov 9 (Reuters) - Shares in the world's largest
sugar company, Tate & Lyle Plc, turned sour on Thursday as the British
group issued its third profits warning in nine months and pointed to less
than sweet future prospects.
The group, reporting a 46 percent slump in half year profits, said
trading conditions had not improved since the summer and there had been a
further deterioration in recent weeks in the U.S. sugar market, where its
divisions are heavily in the red.
Tate is being crushed between abnormally low U.S. refined sugar prices
and rapidly rising energy costs, while markets are highly competitive for
its sweetener and starch products.
``If current conditions persist, it will be difficult to improve on our
first-half performance in the second half,'' said Chief Executive Larry
Pillard in a conference call.
The shares shed nearly seven percent or 16-1/2 pence to 230p by 0935
GMT after falling from around 480 pence a year ago as the stock has
underperformed the FTSE 100 index and fellow UK food groups by around 50
percent over the last 12 months.
``Tate is beset by profit warnings, and today's further warning means
Tate's long suffering shareholders will have to suffer some more,'' said
one food industry analyst.
The sugar and sweeteners group reported a near halving of pre-tax
profits for the 27 weeks to September 30 to 68 million pounds ($96.83
million) before exceptionals and goodwill amortisation from 127 million
pounds on largely flat turnover of of 2.12 billion pounds.
The company also warned that it had seen a 12 million pound increase in
energy costs compared to its previous first half due to rising oil prices,
and expects energy costs for the full year to be 30 million pounds higher
than the previous year.
Tate is desperately trying to sell its heavily loss-making U.S. sugar
operations with a provisional deal agreed for its beet processor Western
Sugar, while the future for its cane refiner Domino is being delayed by
ever worsening market conditions in the U.S. sugar market.
It has signed a conditional deal to sell Western Sugar to the Rocky
Mountain Sugar Growers Co-operative, expected to be concluded in the next
six months, and it announced a 75 million pound write off to cover an
anticipated discounted sale price.
The group also said competitive markets at its U.S. sweeteners and
starch operations Staley and European starch unit Amylum had depressed
overall group profitability.
Tate made profit warnings in March and at its July annual general
meeting over the U.S. sugar situation, and after initiating a review of
its U.S. sugar operations investors had hoped for a speedy sale of both
Western and Domino.
The group announced an unchanged interim dividend of 5.5 pence a share. |