| LONDON, Nov 8 (Reuters) - British sugar and sweetener group Tate &
Lyle Plc reported a six-percent dip in half-year profits on Thursday but
its shares sweetened after the troubled company gave a positive
second-half outlook and held its dividend.
The group, which is selling off its volatile U.S. sugar businesses to
focus on sweeteners and starches, said it had turned optimistic after a
series of profit warnings had rocked the group over the last 20 months and
announced profits slightly ahead of market expectations.
Chief Executive Larry Pillard said he was reshaping the business by
disposing of poorly performing sugar businesses to leave the group less
susceptible to the volatile price cycles in its commodity-orientated
business.
``Overall, trading in this half year has been in line with our
expectations. The outlook for the second half year is positive
notwithstanding increasingly difficult global economic conditions,''
Pillard said.
The group reported underlying pre-tax profits of 64 million pounds ($94
million) for the six months to September 30 compared with analysts'
forecasts of 58-62 million pounds, while the half-year dividend was held
at 5.5 pence per share.
The shares gained 14 pence or nearly five percent to 300p by 0950 GMT,
after suffering a dismal run following four profit warnings over the last
18 months and falling from a peak of 480p in November 1999.
Over this two-year period, the shares have underperformed the London
FTSE All Share index by around 25 percent and European food and drinks
groups by almost 40 percent.
``The reasonably optimistic outlook shows Tate is past the worst. It is
making painful progress, but progress nevertheless,'' said analyst Tim
Potter at Goldman Sachs.
ANOTHER FALSE DAWN?
But fund managers were still cautious, and many needed more evidence of
recovery before buying the stock.
``We've been here before, there have been a lot of false dawns with
Tate. However, there does seem to be a determination to re-shape the
business to overcome the sharp price swings seen in this business,'' said
one fund manager.
Tate has suffered from depressed sugar prices and the volatile
commodity nature of many of its products. But after the four warnings
between March 2000 and February 2001, Tate in late September reassured the
market by saying trading was in line with expectations and ot had no
further bad news to tell.
Pillard said good progress had been made to reshape the group with the
sale of U.S.-based Domino sugar, while the integration of its U.S.
sweetener unit Staley with European starch and sweetener counterpart
Amylum continued according to a plan to achieve annual 50 million pounds
savings by 2004.
He said the group's three core businesses -- Staley, Amylum and
European sugar -- had shown trading equal or ahead of last year, but its
two U.S. sugar business Domino and Western lost 19 million pounds in the
half year.
Earlier this week, Tate completed its 127-million-pound sale of cane
sugar business Domino Sugar to an investment group led by Alfonso and J.
Pepe Fanjul, while it hopes to complete the $96-million sale of its beet
sugar processor, the Western Sugar Company, to the Rocky Mountain Sugar
Growers Cooperative, by end-January. |