Tate & Lyle hit by rising corn costs Full year profit projections at Tate & Lyle have taken a hit in the wake of higher than expected corn prices. In its third quarter trading statement the company blamed a toxic fungus that has ravaged some corn supplies, used to make Tate & Lyle sweeteners, for higher prices. That would cost about £7m more than expected in full year operating profits as a result of lower sweetener operating margins, according to the company. "There will be a £7m increase in net corn costs in the final quarter, largely due to the effect of the aflatoxin fungus on the corn crop," said an analyst note from Davy. "For the full year, guidance looks as though it is lowered modestly - Tate now "expects modest progress" versus the comment of "progress" at the [interim] statement." Javed Ahmed, Tate & Lyle's chief executive, said weaker than expected growth in European sucralose volumes during November combined with fewer product launches would also mean full year sucralose volumes would be lower than last year. However, he said the changes were not long-term. "Structurally nothing has changed fundamentally - Europe is just soft," said Mr Ahmed. In January, shares in Tate & Lyle, which reported £395m in net debt, hit a five-year high to 812p as analysts argued that its transformation into a specialist ingredients maker was still being undervalued. The company, which has a market capitalisation of about £3.7bn, has spent recent years changing itself from what was in effect a commodity sugar company into a producer of speciality ingredients sold to the food and drink industry. Darren Shirley, an analyst at Shore Capital, described the trading update as "subdued" overall, adding that the lower full year sucralose volumes were a disappointment. Shore reiterated its "hold" recommendation on the company. Tate & Lyle share dropped by 3 per cent to 783p in early morning trading. Meanwhile, De la Rue, the currency printer, said full-year profits would be in line with its last financial year amid greater market competition, increased pricing pressures and delayed orders. "As anticipated the bank note paper market remains challenging, reflecting the introduction of additional capacity by other manufacturers, with continuing evidence of pricing pressure," said the company in a trading statement. Of some concern is the ongoing competition in bank note paper Paul Jones, analyst at Panmure Paul Jones, an analyst at Panmure, which has a "hold" recommendation on the stock, said pricing continued to be a problem. "This underlines ongoing pressure in a number of markets . . . of some concern is the ongoing competition in bank note paper, where excess market manufacturing capacity continues to result in pricing pressure," he said. A number of delayed orders from [the first half of the financial year] have been received, though others are still to be confirmed, and could of course be delayed even further. The 199-year-old company, which produces bank notes covering more than 150 national currencies, warned in December that it faced losing one of its most prestigious clients after the Bank of England launched a £1bn tender for the future production of its banknotes. The BoE in late November asked bidders to apply for a contract expected to run for at least 10 years, raising the prospect that the task of producing Britain's banknotes could be passed from De la Rue to a foreign company for the first time. The same month De la Rue had lowered its full-year earnings guidance by almost one quarter due to delays to key currency contracts. It also said that banknote paper volumes declined 15 per cent in the first half of its financial year as heightened competition ate into the group's global market share. De la Rue shares rose by 4 per cent to 943p in early morning trading.