Tate & Lyle mothballs Alabama sucralose facility

by Jeff Gelski
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LONDON — Tate & Lyle, P.L.C. will close its sucralose facility in McIntosh, Ala., and produce all of its sucralose in a more efficient facility in Singapore, the company said while giving results for the fiscal year ended March 31. The action will have no impact on customers.

Over the fiscal year the Tate & Lyle sucralose manufacturing facilities achieved yield improvements of more than 25%, which increased production capacity. The Singapore facility now has more than enough capacity to meet current market needs, according to Tate & Lyle.

The London-based company recognized an exceptional charge of £97 million ($155 million) in the 2009 financial year reflecting the impairment of carrying value of the McIntosh plant. Anticipated cash costs of £60 million associated with the decision to mothball the McIntosh plant will be paid over three years and recognized as an exceptional charge in the year ending March 31, 2010. Tate & Lyle expects the cash costs to have a three-year payback resulting from the reduced operating costs of having a single plant.

The McIntosh facility will retain a core group of employees. If needed, it may be restarted and begin manufacturing sucralose within a few months.

Tate & Lyle recorded sucralose sales of £169 million over the fiscal year, which marked a 14% increase over the prior year. In constant currency, it was a 4% reduction. Splenda sucralose’s share by value in the global high-intensity sweetener market increased to 25% in the 2009 financial year from 23% in the 2008 financial year.

Tate & Lyle estimated the value of the global market for high-intensity sweeteners fell by 11% in the 2008 calendar year while the North American market experienced a 6% value decline. Global new product launches containing high-intensity sweeteners decreased 5% in the 2009 financial year although launches containing Splenda sucralose increased by 7%.

Companywide, Tate & Lyle reported fiscal year sales increased 24% to £3,553 million, which compared with £2,867 million in the previous fiscal year. In constant currency, the increase was 8%. Profit for the year dropped 63% to £70 million from £187 million.

"Market conditions over the past few months have proved challenging, but our focus on the food and beverage sector, which comprises over 70% of our total sales, gives us a measure of resilience, although not immunity, to the economic downturn," said Iain Ferguson, chief executive.

In Food & Industrial Ingredients, Americas, sales were £1,797 million, up from £1,386 million, and adjusted operating profit was £181 million, down from £186 million. Within food, sales were £1,247 million, up from £944 million, and adjusted operating profit was £178 million, up from £144 million.

The global recession and its uncertain impact on customer demand make it difficult to predict the outlook for the year ending March 31, 2010, according to Tate & Lyle.

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