February 3, 2011

Tate & Lyle's net debt may climb on high corn price

Tate & Lyle's net debt is expected to rise in the current quarter because of high corn prices.

The food ingredients group, which lifted the price of its liquid sweetener by up to 20% in response to a 40% rise in corn costs over the past year, expects margins on annual fixed-price corn-sugar contracts to be slightly higher over the coming year despite the increased prices, chief executive Javed Ahmed said.

However, the high corn cost would put pressure on the group's working capital requirements because it cost more to maintain silo stocks.

Tate & Lyle said net debt at the end of its fiscal year to March 31 was likely to be GBP540 million (US$872 million/EUR 630 million), after it fell to GBP462 million (US$748.06 million) at the end of the latest quarter.