UPDATE 3-Tate & Lyle gets corn price boost

* Corn price rise drives Q4 increase in by-product income

* Analysts upgrade year forecasts due to late corn boost

* Sells Fort Dodge ethanol plant to Cargill

* Shares up 4 percent

(Adds further analysts, details, updates shares)

By David Jones

LONDON, March 31 (Reuters) – British sweeteners and starches
maker Tate & Lyle (TATE.L: Quote, Profile, Research) said it had benefited from a rise in
corn prices in the first three months of 2011, which prompted
analysts to upgrade earnings forecasts.

The company also said on Thursday it had sold a mothballed
U.S. ethanol plant to Cargill [CARG.UL].

The London-based group, which makes sweeteners like Splenda,
starches and ethanol, said it gained from the rise in corn
by-products used as animal feeds in the first three months of
this year.

This prompted the upgrades, which helped push Tate’s shares

“The rising cost of corn led to higher by-product prices,
and is the source of an upgrade to forecasts,” said analyst Sara
Welford at house brokers Citi. She upgraded her pre-tax profit
forecast for the year to March 31 to 252.1 million pounds ($405
million) from 247.1 million previously.

Tate’s shares rose 4 percent to 582 pence by 0820 GMT in a
largely flat London stock market. The stock has outperformed the
FTSE 100 (.FTSE: Quote, Profile, Research) by 6 percent this year.

Tate said it saw an encouraging annual performance with
trading in line with market expectations, before the corn boost.

The corn price rise had driven a further increase in
by-product income in the first three months of 2011 to give the
group an additional boost.

Other analysts said the consensus pre-tax profit forecast
would move towards 255 million pounds from a previous 251
million pounds in a company-compiled consensus.

Tate said it had sold the Fort Dodge plant for $57 million,
producing a gain of around 16 million pounds. This would reduce
net debt by the end of its financial year to March 31. The
company had previously said it would be similar to that reported
for Sept. 30.

Last year, Chief Executive Javed Ahmed 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.

Ahmed, who had been focusing on value-added products since
taking on the role of CEO in late 2009, sold Tate’s European
sugar operations last year breaking the group’s 150-year link to
sugar. This was part of his plan to focus the group on
fast-growing speciality sweeteners and to move away from bulk
commodity products.
(Reporting by David Jones; Editing by ; Editing by Dan Lalor
and Jane Merriman)
($1 = 0.6225 pound)

UPDATE 3-Tate & Lyle gets corn price boost