LONDON: British sweeteners and starches maker Tate & Lyle sold a mothballed US ethanol plant in Iowa to Cargill and reported a performance in line with expectations before a corn co-product boost to income.
The London-based group, which makes sweeteners like Splenda, starches and ethanol, said on Thursday it had sold the Fort Dodge plant for $57 million, leading to a gain of around 16 million pounds ($26 million).
Tate & Lyle said net debt should now be be lower at the end of its financial year to March 31, after previously guiding it would be similar to that reported for Sept. 30.
Its shares were up 1.0 percent at 0720 GMT. The stock has outperformed the FTSE 100 by 6 percent this year.
Last year, chief executive Javed Ahmed, who had been focusing on value-added products since taking the role in late 2009, decided not to open the plant as the stream of commodity products anticipated was no longer needed.
The corn mill was built in the ethanol boom, but margins and industrial starch volumes declined sharply in 2008 leaving a rusting hulk in the cornfields of Iowa which was too expensive to commission and open for production.
"The white elephant of an ethanol plant that is Fort Dodge had been sold for 36 million pounds, a small fraction of the cost it took to build, but at least it draws to a close a particularly misguided venture," Panmure Gordon analyst Graham Jones said.
Tate said it had seen an encouraging performance throughout its year with performance in line with market expectations except for a corn price rise that drove a further increase in co-product income in the first three months of 2011 to give the group a late boost.
Tate was giving a trading update ahead of full-year results on May 27. Analysts expected 2010/11 underlying pretax profit of 258.7 million pounds, up from 229 million, according to ThomsonReuters I/B/E/S.
Ahmed sold Tate's European sugar operations last year breaking the group's 150-year link to sugar as part of his move to focus the group on fast-growing speciality sweeteners and to move away from bulk commodity products.
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