Company update: Tate & Lyle Q4
Food-ingredients producer Tate & Lyle PLC said its net debt levels are set to widen as corn prices rise across the US and Europe, hitting the group's fourth-quarter profitability.
"As anticipated, corn prices have continued to rise as supply forecasts continue to tighten, increasing the working capital demands on the business," the group said in a statement.
The company said net debt is set to widen to the level seen at the end of September last year, when it was GBP540 million. It had narrowed to GBP462 million at Dec. 31.
Tate & Lyle said the majority of the corn it is purchasing to keep silos full through to the end of the harvest year has been paid for in January.
Still, Chief Executive Javed Ahmed said he is pleased with the group's pricing strategy in the face of higher prices, which also supported income generation for the bulk ingredients division. "There has been a significant increase in corn costs, (but) we managed to recover that."
Pricing round complete
Earlier, Tate & Lyle said the calendar-year pricing round in North America for the bulk ingredients business is now "substantially complete".
It achieved slightly higher margins on its annual fixed-price corn sugar contracts despite corn price increases of more than 40%, it said.
In Europe, it added it has shortened corn sugar contracts wherever possible to try to mitigate price volatility.
Earlier, the London-based group, which makes sweeteners like Splenda, starches and ethanol, reiterated it expects to make progress in the current financial year on posting an "encouraging" trading performance for the third quarter.
Source: Dow Jones
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