British sugar and sweeteners group Tate & Lyle said this week that it expects first half profits to be in line with expectations, and the second half stronger than in the previous year.
Earlier this year, when the UK carbohydrates ingredients company announced fourth quarter results for the financial year ended 31 March 2003, industry pressures meant that its US cereal sweetener and starch business Staley and European starch company Amylum were unable to secure margin increases in sweetener prices for 2003. But the company added there were early signs that the market for industrial starches was beginning to show some signs of recovery.
This week Tate & Lyle claimed that second-half profits would be stronger than the year before and it would raise prices to offset higher raw material costs.
Figures for Staley's citric acid division suffered last year, hit by a slump in selling prices due to global oversupply. But in a statement on Wednesday the company said that results from the citric acid production line have improved following the acceleration of the closure of the Mexican plant in July 2003 and a small increase in spot selling prices.
But Tate & Lyle also warned that profits might be shaved due to a yet to be completed review of the UK pension fund at 31 March 2003. 'It is anticipated that there will be a small deficit which will result in a modest additional charge to profit,' said the company.
Tate & Lyle made no reference to the proposed overhaul of the sugar regime tabled by the European Commission this week. Reform that could threaten the 10 per cent margin that analysts estimate Tate & Lyle makes at its sugar business.