Doubts over Tate's taste for sugar

Some City analysts expect Tate will seek an exit from its traditional sugar business as it looks to concentrate on higher margin

opportunities.

Around two-thirds of Tate's profits come from supplying sweeteners, starches and ethanol, with the rest from sugar and sucralose sweeteners.

Annual results yesterday showed a 7 per cent drop in underlying profits to 229m, while the decision to abandon plans for an ethanol plant in the United States resulted in a bottom-line loss of 61m, against profits of 113m.

Operating profits in sugar rose by 150 per cent to 30m, reflecting improved margins in its EU sugar business, but Tate warned that profitability this year will be constrained by short-term supply challenges.

The company endured a run of profits warnings in recent years due to factors such as the weak US dollar, lower sugar prices after EU reforms and higher European corn costs.

It has concentrated on its "value added business" which includes ingredients for food such as soups, sauces and dressings.

Javed Ahmed, who took over as chief executive in October, said the company still had a relatively large exposure to more volatile commodity markets, compared with limited exposure to "key avenues" of longer term growth.