| LONDON, Feb 6 (Reuters) - The world's largest sugar company
Tate & Lyle Plc issued its fourth profits warning in 11 months on
Tuesday, blaming higher energy costs and a worsening U.S. market.
The group says a sharp rise in energy prices will add more than 40
million pounds ($58.66 million) to its costs for the current year,
compared to its 30 million estimate last November.
``The energy cost increases coupled with a continued squeeze on margins
have lowered our expectations for the current financial year to March
2001,'' it said in a trading statement.
Tate shares dipped 3.5 percent, or 9-1/2 pence, to 263p by 1130 GMT.
The 1.2 billion pound group has underperformed other UK food stocks by 30
percent over the past year.
Tate is suffering from rock-bottom U.S. refined sugar prices and
rapidly rising energy costs, as well as highly competitive markets for its
sweetener and starch products.
``The bad news is there is another downgrade, the good news is that
Tate's main businesses Staley and Amylum have turned the corner,'' said
food industry analyst David Lang at Investec Henderson Crosthwaite.
Lang trimmed his pre-tax forecast for the year to March to 155 million
pounds and for the next two financial years to 150 million and 200 million
pounds.
RATIONALISATION NEEDED
Other analysts said Tate's volatile commodity-orientated business has
suffered from overproduction, and until there was a rationalisation of the
U.S. sugar industry it would be difficult to predict group earnings.
Tate added that the U.S. sugar regime remained unworkable and profit
margins had been squeezed, due largely to overproduction which was
affecting its Domino cane refining business and its Western beet
processing division.
The gap between raw and white sugar selling prices had narrowed further
in recent weeks, leading to worse than expected trading results at the two
unprofitable units.
The group said the planned sale of Western announced last year to the
Rocky Mountain Sugar Growers Co-operative remained on track, and it
continued to pursue ``alternatives'' for Domino, which investors hope will
mean an eventual sale.
On a more positive note, Tate said its European and U.S. starch and
sweeteners units Amylum and Staley should showed improvement next year and
lead to a ``materially improved'' performance for 2001-2002, and this
would be helped by a ``strategic solution'' to its U.S. sugar interests.
Last November, the company reported a 40 percent slump in first-half
pre-tax profits to 68 million pounds on turnover largely flat at 2.12
billion pounds, as the U.S. sugar market continued to deteriorate. Tate
had already warned in March and July about the U.S. sugar situation. |