Tate & Lyle pays £55m damages

SUGAR and sweeteners group Tate & Lyle is paying $100m (£55m) in damages to settle a long-running civil case in the United States. The UK company was one of several firms accused of fixing prices for high-fructose corn syrup, a sweetener used in fizzy drinks.

Tate & Lyle said it was settling the action to avoid the uncertainty of a jury trial and denied any wrongdoing. The payment would be booked as an exceptional charge, it said.

The company, whose products range from cane sugar in Vietnam to Lyle's Golden Syrup in Britain, said without giving any figures that its first-quarter profits had beaten expectations and the improved trend was likely to be maintained for the full year, helped by a decline in wheat prices in Europe and strong demand for zero calorie sweetener sucralose, which is sold under the Splenda brand.

In a trading update, T&L said profit before tax and exceptional items for the year to March 2005 will be higher than forecast at the time of the preliminary announcement of last year's results in June.

Analysts had been expecting a full-year profit before tax and exceptionals of about £207m in the current year, down from £227mn the year to March 2004.

Analysts at Citigroup said the $100 million settlement was higher than expected, but mitigated by the positive outlook statement.

'There is some scope for increasing underlying earnings estimates for the year to March 2005,' they wrote in a research note, keeping a 'hold' investment rating on Tate & Lyle shares.