Tate & Lyle, the sweeteners group, said on Wednesday it had made a “satisfactory start” to the year, although it warned that the fallout from the European Union’s sugar reform plans would continue to weigh on business for the next six months.

Iain Ferguson, chief executive, said pre-tax profit in the first quarter was “broadly in line” with the same period last year, with three of its four main businesses performing well.

“Volatile and exceptionally high” corn prices had helped boost its food and industrial Ingredients business in the Americas, where Tate & Lyle makes 30 per cent of its global sales.

Sucralose, the low-calorie sugar derivative that is marketed under the Splenda brand, continued to see strong sales volumes, although management conceded that increases in sales prices were slower than had been anticipated.

The company said that the only section of its business that was struggling was the EU sugars business, which it acknowledged was operating in a “difficult market”.

Tate & Lyle is preparing for a reduction in the EU reference prices for sugar, which will occur this October as part of the EU’s sugar reform. Under the reform, the prices paid for sugar will fall by just under 40 per cent by 2010, as refiners use less European-produced sugar beet, and increase the amount of sugar they source from tropically produced sugar cane. Europe’s farmers will also grow 6m less tonnes of sugar beet per year.

The company said these adjustments meant there was now an “overhang of surplus sugar”, which would keep prices soft until the second half of the surplus year, at which point it foresees a greater equilibrium between supply and demand for EU sugar.

The sugars business has also suffered from the soaring price of gas used to power its British sugar refiner, and Tate & Lyle has decided to power the boiler in the refiner using biomass from wheat husks. A new biomass boiler is also being installed at the company’s new corn mill in Loudon, Tennessee.

In total, Tate & Lyle expects to spend £195m this financial year on fuel costs, up from £150m last year.

At the beginning of this month, Tate & Lyle announced it was selling its international sugar trading business to Bunge, the US oilseed and fertiliser group. This division was based in the UK and made a loss of £9m last year. Its disposal will mean an increased amount of profits will come from North America, increasing the tax rate on Tate & Lyle’s remaining businesses to approximately 31 per cent for this year.

Shares in Tate & Lyle were down 21½p or 4.8 per cent at 422½p in afternoon trading.