Tate & Lyle shares jump after new boss is announced
SUGAR group Tate & Lyle has seen its shares skyrocket after it named Javed Ahmed, the 49-year old European head of consumer goods giant Reckitt Benckiser, as its chief executive.
Shares of the battered Golden Syrup maker jumped 10.7 per cent in early trading, before closing up 8.2 per cent at 296p. They had fallen around 32 per cent this year so far under current boss Iain Ferguson, who is leaving after six years in charge.
Charles Stanley analyst Jeremy Batstone-Carr said Ahmed is highly regarded and the share bounce also reflects “the fact that the embattled Ferguson is leaving”.
Although the dividend policy is expected to be maintained when the group reports annual results on 28 May, analysts believe Ahmed may look to cut the payout in future to relieve Tate’s high debt, and as the dividend yield has reached a heady 9.4 per cent.
The handover process is expected to complete in November.
The group has issued two profit warnings this year so far and dropped out of the FTSE 100, suffering after a ruling last month that it cannot legally bar imports of a cheap Chinese version of its sucralose sweetener Splenda.
The ruling left a bitter taste at Tate, which has also suffered with the recession hitting demand for its range of sweeteners in food and drink products, industrial starches for the paper industry and ethanol in US gasoline.
Ferguson’s departure represents the completion of a board shake-up at Tate, with chairman Sir David Lees set to be replaced by Sir Peter Gerson.