The group’s profit before tax for the nine months to 31 December 2009, before the impact of exchange translation, was in line with expectations.
Trading patterns experienced during the first half-year continued, though the group’s performance in the third quarter was marginally below expectations, before the impact of exchange translation, due principally to lower industrial sales volumes in Food & Industrial Ingredients, Americas.
Sucralose, Food & Industrial Ingredients, Europe and Sugars each performed in line with expectations in the quarter. As expected, Sugars delivered improved margins following the final institutional price change on 1 October 2009.
A strong focus on cash management continued, and net debt at 31 December 2009 was £864m, a further reduction of £123m during the quarter. This improvement was due to strong free cash flows from continuing operations, driven principally by continuing reductions in working capital throughout the business.
On 25 November 2009, the company issued £200m of 6.75% 10-year bonds, with the proceeds used to refinance existing debt, including the repurchase of £100m of bonds maturing in 2012, thereby lengthening average maturity of gross debt to 5.3 years.
The 2010 calendar year pricing rounds at its Food & Industrial Ingredients businesses in the Americas and Europe, which have been conducted against the backdrop of the lower demand seen following the economic downturn, are now substantially complete.
Sweetener selling prices in the Americas for the 2010 calendar year will be below the level achieved in the 2009 calendar year. After taking into account lower input costs, including net corn costs, overall sweetener margins in the 2010 calendar year within the Americas are expected to be somewhat below the 2009 calendar year.
We expect reported operating profit for the full year to be marginally below the level reported in the comparative period. We continue to expect the reported net interest cost in the 2010 financial year to be higher than the comparative period due to an increase in charges related to post retirement benefit plans and the suspension of interest capitalisation in respect of the Fort Dodge, Iowa, plant while final completion is postponed.
Source: Tate & Lyle
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