FALLING prices for sweeteners paid by soft drinks companies like Coca-Cola and Pepsi are set to turn profits sour at sugar group Tate & Lyle.
Sweetener selling prices in the Americas in 2010 would fall short of those in 2009, meaning overall margins from its US corn sweetener business this year would probably be “slightly below” last year, Tate said in a trading update.
The group said operating profits for the year to March 2010 would fail to match the previous year.
“We expect reported operating profit for the full year to be marginally below the level reported in the comparative period,” it said.
US corn millers such as Tate, Cargill and Archer Daniels Midland agree sweetener prices at the start of the year with buyers like Coca-Cola, PepsiCo and Dr Pepper Snapple.
Tate’s business supplying sweeteners, starches and ethanol, produces more than two thirds of group profits with the rest coming largely from sugar and sucralose super sweeteners. Group finance director Tim Lodge said: “We expect sweetener margins to be somewhat down and we will see an average fall in margins of around 10 per cent for US sweeteners.”