This Interim Management Statement covers the period from 1 April 2012 to 30 June 2012, which is the first quarter of the financial year. At the Annual General Meeting of Tate & Lyle PLC, to be held in London July 26, Sir Peter Gershon, Chairman, made the following statement:
INTERIM MANAGEMENT STATEMENT
OPERATING PERFORMANCE – CONTINUING OPERATIONS
Adjusted operating profit for the Group for the first quarter was in line with our expectations.
In Speciality Food Ingredients, volumes and sales grew compared with the first quarter of the previous financial year, with solid overall volume growth in the US and within emerging markets offset by a weaker performance from Europe. Sucralose volumes were lower than the prior year period (which included an unusually large volume from customers’ new product launches), primarily due to the more difficult market conditions in Europe. This, together with the impact of the strike at our joint-venture plant in Turkey, which was settled towards the end of the period, resulted in operating profit in this division being lower than our expectations.
Within Bulk Ingredients, operating profit was slightly above our expectations with a strong performance from liquid sweeteners in both the US and Europe more than offsetting extremely challenging conditions in US ethanol and more normal co-product returns, following the exceptionally strong performance in the comparative period last year.
CORN PRICES AND CO-PRODUCTS
Since mid-June 2012, corn prices in the US have increased significantlyas a result of the severe and ongoing drought in the mid-west and concerns over the impact this will have on this year’s harvest and corn supplies overall. Continued dry and hot conditions in central Europe have also driven up European corn prices.
Co-products generated a small amount of additional income during the quarter, as we locked in prices at levels marginally higher than those anticipated during the 2012 pricing round.
It is not clear how the current volatility in the corn price and markets that drive co-product demand and pricing will impact the business over the remainder of the year. As in previous years, we will continue our strategy of maintaining full corn silos in the US to secure supply against the backdrop of tight market conditions.
DISPOSAL OF VIETNAM SUGAR INTERESTS
Further to the announcement made in April 2011 and following completion of regulatory and government approvals, on 30 June 2012 we completed the disposal of our Vietnamese sugar interests to TH Milk Food Joint Stock Company for consideration of £45 million.
DEBT MANAGEMENT AND BALANCE SHEET
The Group’s financial position strengthened during the period.
Net debt of £373 million at 30 June 2012 has reduced from £476 million at 31 March 2012. In June, at their maturity, we redeemed the outstanding £100 million bonds from our own funds.