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Tate & Lyle issues another profit warning Tate & Lyle issues another profit warning
(35 minutes later)
British food ingredient company Tate & Lyle has issued its third profit warning in a year, hit by weak trading at its sweetener business.British food ingredient company Tate & Lyle has issued its third profit warning in a year, hit by weak trading at its sweetener business.
The company, which makes Splenda, warned that annual profits would be "modestly below" the range of £230- £245m that it forecast in September.The company, which makes Splenda, warned that annual profits would be "modestly below" the range of £230- £245m that it forecast in September.
The September figure was itself a downgrade from earlier forecasts.The September figure was itself a downgrade from earlier forecasts.
Tate blames competition from cheaper Chinese sweeteners and falling sugar prices in Europe.Tate blames competition from cheaper Chinese sweeteners and falling sugar prices in Europe.
Shares in the company were down almost 13% in early trading.Shares in the company were down almost 13% in early trading.
The company has been struggling over the last year.The company has been struggling over the last year.
Supply issues
A harsh winter the United States in 2014 reduced Tata's supply of corn which is the firm's raw material for the production of sweeteners.A harsh winter the United States in 2014 reduced Tata's supply of corn which is the firm's raw material for the production of sweeteners.
"The very cold and long winter in the US meant Tate & Lyle came into 2014 with lower [corn] stocks than usual, as the company produces a lot of corn in the US," said Alec Mattinson, finance editor at The Grocer magazine."The very cold and long winter in the US meant Tate & Lyle came into 2014 with lower [corn] stocks than usual, as the company produces a lot of corn in the US," said Alec Mattinson, finance editor at The Grocer magazine.
"This was exacerbated by a shutdown of its Singapore sucralose factory - meaning it didn't have enough product to fulfil orders," he added."This was exacerbated by a shutdown of its Singapore sucralose factory - meaning it didn't have enough product to fulfil orders," he added.
As an emergency measure Tata had to spend £31m flying orders direct to its customers.As an emergency measure Tata had to spend £31m flying orders direct to its customers.
Chinese challenge
David Turner, global food and drink analyst at Mintel said that the production problems at Tate & Lyle were "short term issues" that could be corrected with "correct business planning".
In the longer term Mr Turner says that competition from lower priced Chinese sweeteners is a big challenge.
He thinks Tate might be considering buying a competitor to help counter that threat.