Tate & Lyle warns of lower profit due to currency hit

(Reuters) - Tate & Lyle Plc (TATE.L), the British food ingredients maker, said it expected full-year reported adjusted pretax profit to be "modestly below" a year earlier, hurt by the drop in values of the Mexican peso and the Brazilian real.

Shares in the company, which sells sweeteners and other ingredients to packaged food and drink makers, fell as much as 9 percent, making it the largest percentage loser on London's FTSE midcap market (.FTMC).

Analysts at Exane BNP Paribas said they expected the consensus for the group's full-year reported profit to come down by about 3 percent from about 195 million pounds.

Tate, which has exposure to the peso and the real through its joint venture with Almidones Mexicanos and a citric acid plant in Brazil, had reported adjusted pretax profit of 193 million pounds a year earlier.

Margins at Tate's unit that makes food ingredients and stabilisers fell in the three months ended Dec. 31, hurt by a sharp rise in the cost of some ingredients.

The company also said it expected a small loss for the full year from commodities due to weakness in the U.S. ethanol market, which Exane analysts linked to Tate's presence in one corn wet mill.

It had previously expected commodities to result in a "small profit".

Tate is in the process of overhauling its business to focus on higher-margin speciality food ingredients instead of commoditised bulk ingredients, which account for a majority of the group's sales.

Speciality ingredients, such as artificial sweeteners and dietary fibres, involve special technology or patents, and therefore are much more profitable than undifferentiated bulk ingredients such as high-fructose corn syrup.

The company reaffirmed its full-year forecast and said the longer-term outlook for the business was positive, as it expected the speciality food ingredients market to grow at mid-single digits over time.

Shares in the company were down 8.8 percent at 530.5 pence at 1009 GMT, underperforming the FTSE 350 Food Producers Index which was down 3 percent.

($1 = 0.6909 pounds)

(Reporting by Noor Zainab Hussain and Esha Vaish in Bengaluru, additional reporting by Martinne Geller,; Editing by Gopakumar Warrier and Sunil Nair)