Sachets of Splenda sweetner are arranged in London, U.K., on Friday, Sept. 28, 2007.  Tate & Lyle Plc fell the most in two decades in London after predicting a loss for its sugar-trading division and saying higher corn prices will dent profit. Photographer: Hannah Songer/Bloomberg News

The good news in Tate & Lyle’s first-half results was that there was no more bad news after September’s profits warning.

The British sweetener maker on Thursday reported that pre-tax profits almost halved in the six months to September 30, but stood by its forecast of full-year pre-tax profits of £230m-£245m. It also raised its interim dividend by 5.1 per cent to 8.2p a share.

Javed Ahmed, chief executive, said the group was focused on working through the two issues that have led to two warnings this year: its supply chain and the competition from China that has undercut prices for sucralose, one of its main ingredients.

Nick Hampton, who became finance director on September 1, was reviewing the group’s supply chain to ensure it “reflects our increasingly global business”, Mr Ahmed said.

Demand for speciality food ingredients has been growing annually by more than 20 per cent in recent years, but Tate & Lyle’s supply chain does not seem to have kept up.

Last year’s harsh winter in the US – where most of the company’s starch plants are based – had left inventories too low to cope with customer orders in Latin America and Asia, resulting in orders being airfreighted to these regions at a cost to the company of £30m.

Mr Ahmed said he was also reflecting on “how best to maximise returns” from the Splenda sucralose business. Asked whether this could mean selling, he said: “This is not a call for selling the business at all. But the market is in flux and we need to take a methodical, objective view to see if we should be doing things differently.”

Sucralose prices have dropped by 25 per cent over the past 18 months after oversupply, intense competition from producers in China and weak US fizzy drink sales.

Group pre-tax profits fell 47 per cent to £79m in the first half, on sales down 21 per cent at £1.2bn.

Martin Deboo, analyst at Jefferies, said: “A near-40 per cent decline in speciality food ingredients profits, even at constant foreign exchange, does not look pretty.” But he added that excluding sucralose, speciality ingredients showed “underlying momentum . . . so the future heart of Tate is still beating strongly, it would seem.”

Analysts at Citi said: “Whilst uncertainties remain, in particular about sucralose pricing, we expect the market should be reassured by today’s release . . . the absence of any new negatives is a positive in our view.”

The shares were 1 per cent lower in early London trading at 601p.

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