UPDATE 3-Tate & Lyle warns on pricing as H1 profits dip
* Warns of more competitive U.S. sweetener pricing
* Says on track to meet its expectations for year
* H1 pretax profits 112 mln pounds, consensus 113 mln
* Half-year dividend unchanged at 6.8 pence
(Adds comments by finance director, analyst; share price)
By David Jones
LONDON, Nov 6 (Reuters) - British sugar refiner and sweetener group Tate & Lyle Plc (TATE.L) warned on Friday of pricing pressures for U.S. corn sweeteners, its biggest single market, after reporting a 13 percent dip in first-half profits.
The warning on tougher pricing came as investors wait to hear from new chief executive Javed Ahmed on his plans for the company after taking over the reins at the start of October.
Prices for Tate's corn sweeteners sold to big soft drink and industrial users in the United States are usually agreed towards the end of every calendar year and Tate cautioned that the next pricing is unlikely to be much better than last year's.
"There is a little pressure as volumes are softer and this will be reflected in the round being slightly more competitive on pricing," Finance Director Tim Lodge told Reuters in an interview after the results.
He added that trade to the food and beverage industry was steady but there was pressure from industrial users where demand for Tate's starches in paper and packaging was depressed.
Former Reckitt Benckiser executive Ahmed took over from Iain Ferguson on Oct. 1 and analysts hope he will have something to say on squeezing better returns from the investments the group has made over the last four years and on improving cash flows.
"Of key interest is whether Javed Ahmed makes any strategic changes - such as exiting sugar to focus on ingredients Americas and sucralose - but we think any announcements are more likely to come with full-year results in May", said Graham Jones at brokers Panmure Gordon.
The London-based group which makes the Splenda/sucralose sweetener reported pretax profits of 112 million pounds ($185 million) for the half-year to end-September, which compared with a consensus forecast of 113 million pounds, according to Thomson Reuters I/B/E/S.
Tate had already warned of lower profits due to the fall in prices of some of its co-products from its sweetener operations such as corn gluten oil and meal, and also the general softness in demand for its products due to the global downturn.
Looking ahead it warned that global industrial starch, U.S. ethanol and U.S. animal feed markets remain under pressure but sees further growth for its sucralose zero-calorie sweetener and improved profits from sugar in the second half.
The group said it was on track to meet its own expectations for the full year to end-March 2010 with Julian Hardwick at house broker RBS looking for pretax profits of 224 million pounds, down from the previous year's 247 million pounds.
The shares dipped early but then recovered to stand 0.2 percent firmer at 458 pence by 0845 GMT. They have recovered from a low in March of 225.75p, but have underperformed the FTSE 100 index .FTSE by around 6 percent so far in 2009.
The half-year dividend was unchanged at 6.8p a share. ($1=.6053 pounds) (Editing by Greg Mahlich)
