Sugar refiner and sweetener maker Tate & Lyle posted a near 20 percent fall in half-year profit on Wednesday but its shares rose as it closed a key U.S. sweetener pricing round early and saw it as a "good result."
The British group said the early completion of the 2008 pricing of sweeteners for U.S. soft drinks and food makers will lead to a modest profit and margin rise for the division to boost the group's overall outlook into its second half.
The upbeat news follows the London-based company's three profit warnings in the last nine months about the growth of its Splenda sweetener, high corn prices, losses at its sugar trading arm and the weak dollar.
The group reported underlying pretax profit of 120 million pounds ($248 million) for the six months to the end of September, in line with analysts' consensus forecast of 118 million pounds and a 115 million to 120 million range.
"We see the outlook for the second half as broadly similar to the first half," Chief Executive Iain Ferguson said in an interview. He has come under pressure from investors after the profit warnings and the resultant share price plunge.
Tate's shares rose 1 percent to 437-1/2 pence, off an early high of 452p. The company's last profit warning in late September sparked a near 30 percent plunge in the group's share price to a three-year low.
Analyst Jeff Stent at Tate's broker Citigroup called the results "remarkably unremarkable."
Other analysts said Tate's results came as a relief after its recent problems and share price fall, and were unlikely to change full-year forecasts where the consensus is for pre-tax profits of 235 million pounds for the year to March 2008.
"The board has expressed confidence in its management, while the group has spoken to a number of key shareholders and they have expressed confidence in the group's strategy," Ferguson said.
"This was always going to be a tough year of transition with one of two disappointments on the way but we remain committed to build our value-added side."
Tate cautioned it faced a tough second half in Europe due to high corn prices, is seeing only modest growth in Splenda, which accounts for 20 percent of group profit, while the weak dollar trimmed 10 million pounds off profits in the first half and a possible 6 million pounds in the second half.
The group said it will raise its half-year dividend by 5 percent to 6.5p, and will renew its share buyback program of up to 275 million pounds which it first announced in July.