Tate & Lyle completes Mexican sugar sale

The ingredients giant announced the move in October and has since received clearance under the Mexican Federal Economic Competition Law to complete the sale of its 49 per cent shareholding in its Mexican business, Grupo Industrial Azucarero de Occidente. The firm sold its stake to E D & F Man Holdings for US$93m (€66.5m), marking Tate & Lyle's departure from the sugar industry in the Americas. It sold its Domino business in the United States to Refined Sugars of New York in 2001, and last year it sold its Canadian business, Redpath, to American Sugar Refining. Tate & Lyle now only has sugar operations in the UK, Portugal and Vietnam. A spokesperson told FoodNavigator.com in October that the firm is presently investing in its remaining European sugar businesses. It has no plans to rid itself of its Vietnamese interest (a joint venture), either, since this is "a growing market with a future".​ The consideration from the sale in Mexico will be used to reduce group debt. The company's net debt reached £900m (€1,219m) this financial year, which ended March 31 2007. This was up £34m (€46m) from 2006 when its debt totalled £866m (€1,173m). However, the spokesperson said this debt is not a cause to worry; rather it is good cash flow management. The decision to sell its Mexican sugar business came as Tate & Kyle warned that profits from continuing operations in its sugars division were "sharply lower"​ than in the prior comparative period, principally due to a forecast small loss in sugar trading for the first half compared to a profit of £15m (€21m) in the prior year. Occidente operates three sugar cane mills in Mexico and primarily serves the domestic market. Tate & Lyle spokesperson said the decision to sell has not been spurred by any particular issues with sugar in Mexico, but that it makes strategic sense since the firm has no other sugar presence in the region. Tate & Lyle's repositioning towards ingredients that can add value to food products, was spurred in particular by reform of the European sugar sector, in which Tate & Lyle was a major player but, with the introduction of sugar quotas from last year, it could no longer see a strong future. When commodity prices fluctuate, whether caused by regulatory, environmental or other factors, the corresponding cost of raw materials can have a serious impact on an ingredient firm's bottom line. Tate & Lyle hopes now to cut back the on-going effects of this. In May this year, the group reported sales from continuing operations of £3.81bn (€5.6bn) for the 12 months ended March 31, up from £3.46bn (€5.09) the previous year. Operating profit was £333m (€490m).Tate & Lyle's share of the net operating assets of Occidente was £42m (€60.7m), and its share of operating profit was £6m (€8.7m).