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May 19, 2009, 4:13 a.m. EDT

Tate & Lyle Names New CEO

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By Michael Carolan

LONDON -- U.K. sugar and food-ingredients producer Tate & Lyle /zigman2/quotes/205109332/delayed UK:TATE +0.83% PLC Tuesday named Reckitt Benckiser PLC's Javed Ahmed to succeed its embattled Chief Executive Iain Ferguson.

Mr. Ferguson -- who joined as Chief Executive from Unilever PLC in 2003 -- will stay on in his role until Mr. Ahmed joins the company between now and Nov. 15, the company said.

Mr. Ahmed is currently executive vice president for Reckitt's Europe division, having held a number of senior roles within Reckitt over the last 17 years in Europe and North America. He has been a member of the Reckitt Benckiser Executive Committee since 2003.

"We are confident that, in Javed, we have found a worthy successor to lead Tate & Lyle in the next phase of its development," Tate & Lyle's chairman David Lees said.

Shore Capital analyst Clive Black said Mr. Ahmed looked a "good catch" -- at least on paper.

"Reckitt's a fantastic corporate stable," he said, "he wouldn't be in such a position if he wasn't a competent operator."

The market agreed, sending Tate & Lyle shares up nearly 10% in a broadly higher London market.

The stock -- which traded at around 300 pence a share when Mr. Ferguson joined in May 2003 -- rose to more than 820 pence by the end of 2006, only to fall back below 300 pence earlier this year.

Mr. Ferguson's imminent departure has been rumored for a number of weeks, after a torrid couple of years for the company in which it issued a series of profit warnings and disappointing results.

Earlier this month, press reports suggested a mystery activist investor was looking to shake up Tate & Lyle's management team after building a sizable stake in the company through equity derivative contracts. Tate & Lyle has so far remained tightlipped on the speculation.

Chairman Lees is already set to leave later this year -- to be replaced by Peter Gershon, while Finance Director John Nicholas departed in September 2008.

Shore's Mr. Black said Mr. Ahmed was joining a "very difficult corporate vehicle, which suffers from "perennial volatility."

While Mr. Ferguson, the outgoing CEO, tried to halt this pattern with his "value added" strategy, the results were mixed.

"It was probably time for a fresh pair of eyes," said Mr. Black.

The company has issued two profit warnings already this year, citing reduced demand for sugar, sweeteners and industrial ingredients. It has also postponed the startup of its new ethanol plant at Fort Dodge, Iowa, until market conditions improve.

Last month, the company suffered a further setback when a U.S. court ruling on its Sucralose patents left its key artificial sweetener exposed to low-cost generic imports.

Sucralose -- which trades under the name Splenda -- had been the key plank in Mr. Ferguson's project to turn Tate & Lyle into a "value added" food company rather than a food-commodities business.

While Sucralose accounts for only 4% of Tate & Lyle's sales, its strong margins means it makes up 21% of the group's profit. Tate & Lyle's traditional businesses -- producing sugar and industrial ingredients -- have far lower margins and are more susceptible to the vagaries of global commodity pricing.

Write to Michael Carolan at michael.carolan@dowjones.com

UK : U.K.: London
785.50 p
+6.50 +0.83%
Volume: 94,905
May 17, 2022 9:03a
P/E Ratio
Dividend Yield
Market Cap
£3.09 billion
Rev. per Employee

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