Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
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Tate of the art: Which masterpiece of modern art best represents the full year results of Tate & Lyle, a company whose co-Founder also set up the Tate Gallery? One of Francis Bacon’s screaming popes might encapsulate how investors feel about an 82% drop in full year pretax profits to £51 million. Alternatively, Tracey Emin’s unmade bed would convey a sense of how far reform efforts have got at the sweeteners group. The artificial sweetener Splenda is the problem. Sales have been depressed by low-priced generic competition since patent protection expired in 2009. Had T&L followed best practice in the analogous drugs business, it would have ensured its pipeline was full of replacements. The group held the full year dividend at 28p, but precariously. Free cash flow cover of the payout fell from 1.8 to 0.5 times. Proceeds from the sale of bulk ingredient plants will support cover next year. After that, prospects depend on a tilt towards speciality products that is fraught with execution risk. The forward earnings ratio of 16 times would befit a finished picture better than this work in progress.
Today's figures were every bit as bad as we thought they would be, with no respite on the horizon. The worrying thing is the Speciality food ingredients business has suffered as well as the other parts of the business. The company talks about the evolution of Tate & Lyle into a global Speciality Food Ingredients business supported by cash generated from Bulk Ingredients, yet the results today do not support their vision. Another year of going backwards, with no improvement in sight. The only bright spot is the dividend has been maintained, but for how long before that too, is cut. I have no faith in the current BOD, but then I have been saying this for some time now.
...Therefore have taken a long at 572.
An overnight short would have done well at open so sham I couldn't place one. However, the results don't announce much we don't already know so I am expecting a small recover back towards 600 during the day, as this was where bad news was already priced in at before results.
Key figures to watch are for: Maintenance of dividend at 28p for this year and next Profits to come in not much less than £230m, so anything below c.£210m will be probably be a miss punished by the market. Net debt should not be much higher than £500m. £525+ will send jitters Also watch out for any write downs (e.g. prop. impairement)
Really hard to pitch this one - short or long. Maintaining div as per 21 Apr RNS will help. Any sniff of this going down next year and this will dive. I wonder, however, if there's more bad news that requires kitchen sinking tomorrow . I don't have more cash until tomorrow to play with, but if I were to be able to trade I think I would go with a good kitchen sinking tomorrow and take a short out tonight. I can't see a major rise on the cards tomorrow.
Shares in sugar, sweetener and food ingredients group Tate & Lyle were losing their flavour on Wednesday after analysts at Credit Suisse lowered their rating on the stock from 'neutral' to 'underperform'.
The recent trading statement said that an announcement will be made by the end of April regards the Splenda brand. Could it be this coming week, if so the SP could be volatile over the next few days
Tate & Lyle shares rise on deal talk: Investors in Tate & Lyle enjoyed more good news as markets digested the bid interest in its Splenda sweetener business. The FTSE 100-listed company said last week that pretax profits would come in “modestly below” the £230 million estimate it provided for the market in September. After three profit warnings in the past 12 months, that was enough to send the shares higher. This week has brought more good news for investors as Ajinomoto, the maker of the low-calorie sweetener aspartame, is said to be interested in Tate’s Splenda business. Tate management are currently reviewing their options with Splenda and are due to announce the results of that in late May. The majority of Tate & Lyle sales are focused on the United States, where the bulk ingredients division, which manufactures corn syrup for the drinks industry, generates 70% of group sales and about 45% of profits. The stable profits and the bid interest have seen Tate’s shares gain almost 8% during the past seven days. The shares will always have something of a floor provided by a dividend, which offers a prospective yield of 4.7%, but until the profits start growing again they are a hold. Tate & Lyle at 643p+17p. Questor Says “Hold”.
Announced that trading will be slightly less than last predicted won't do anything for the SP I suspect. Interesting to note comments on Splenda, could this be sold off or spun off as a separate company?
Trading statement due this week, will there be another sharp drop in share price Or can we expect a little bit of good news. 5% swing in so either way but which way?
for myself, bought these last week, quite a reasonable slice of my future pension money, they are well in the blue at the moment, a couple of percent up in a couple of days is well above the yearly bank rate, seems very low risk and if a possible take over should pay dividends, seems almost a no lose situation, but you never know
Doubtful about takeover - and judging by the lack of reaction on the share price so are the big boys. Back in myself after a few years out simply due to divi and believe there will be a 'reversion to mean' in the sp/performance over time giving some potential capital gain
bought quite a lot of these shares as there has been talk of a possible takeover, what are your thoughts?
good value, still projecting profits, dividend should be ok. Good opportunity at this level imho
Tate... grrr... hard company to figure out. Seems to me the general share chart rises for a few weeks them seems to plumet and repeats itself again. I got in at 570p. I think there is some long term value in this share, I personally see them around 600p in March/April, reason being the market may have over reacted to the last profit warning. Other opinions ? thanks
£400million hit won't be sweet for Tate: Nearly £400million was wiped from the value of Tate & Lyle yesterday after its third profit warning in a year. It blamed a weak performance by its bulk ingredients operation in the three months to December.
They are not really sugar anymore that was sold to an American company although still sold as Tate and Lyle, more a bulk ingredients company and sugar substitutes for food SPLENDA. As for buying for capital growth make your own decision, personally I think they will drop a bit more yet and then rise, similar to PFC but really don't think you should time the bottom. It all depends if you feel they are oversold, looking at the trade volumes today a lot of people think they are, and as I said previously the dividend is good in the meantime. As always make your own decisions and DYOR. To time buying I always find it useful to look at Bollinger bands they are a good indicator if a share is cheap.
I would avoid sugar on the basis of falling prices right now.
Is it a good time to buy the shares for capital growth?????
I got in early so it was a nice daytrade. Disappointed it didn't reach 6.
The dip could be an opportunity to add as long as they maintain the dividend
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Maybe weaker sterling will have improved global earnings and that might have helped somewhat
Sold my modest holding ahead of tomorrow's interim results. Seeing that ABF's sugar division had performed poorly in yesterday's interims, and improvements aren't likely short term, I'm not convinced that tomorrow will be a good news day for T&L.