Nov. 4 (Bloomberg) -- Tate & Lyle Plc, Europe's biggest sugar- cane refiner, said first-half profit fell 25 percent after the company settled an antitrust lawsuit against its A.E. Staley unit over prices of high-fructose corn syrup.

Net income in the six months ended in September fell to 58 million pounds ($107 million), or 12.3 pence a share, from 77 million pounds, or 16.3 pence, a year earlier, London-based Tate & Lyle said in Regulatory News Service statement. Sales rose 0.2 percent to 1.67 billion pounds.

Profit before taxes, amortization and one-time items jumped 9.2 percent to 130 million pounds as concerns about obesity and the spread of the low-carbohydrate diets boosted sales of Splenda- brand sucralose sweetener. Tate & Lyle will spend 97 million pounds to build a sucralose plant in Singapore.

``Higher energy costs and the outcome of annual pricing negotiations'' at Tate & Lyle's starch businesses will influence second-half results, the company said in the statement.

Tate & Lyle shares have climbed 61 percent since Feb. 19, giving the company a market value of 2.1 billion pounds. They reached 446.75 pence yesterday, the highest since November 1999.

Tate & Lyle took a charge of 56 million pounds to settle a lawsuit, filed in 1995 on behalf of more than 2,000 companies, that alleged that producers of high-fructose corn syrup fixed prices. Tate & Lyle in July was the last defendant to settle, following Archer Daniels Midlands Co. and Cargill Inc., based in Wayzata, Minnesota.

Damages against A.E. Staley might have reached $4 billion had the case gone to trial, Tate & Lyle said on July 28. Decatur, Illinois-based Archer Daniels, the world's largest grain processor, owns 5 percent of Tate & Lyle.

Sucralose Sales

Pretax profit was above the 127 million-pound average estimate of six analysts surveyed by Bloomberg News. Coca-Cola Co. and PepsiCo Inc., the world's two largest soft-drink makers, in August introduced drinks using no-calorie sucralose.

Sucralose, made by combining chlorine atoms with the sucrose molecule of sugar, and 600 times as sweet, was discovered by Tate & Lyle researchers in 1976 and licensed to Johnson & Johnson's McNeil Nutritionals in 1980. Tate & Lyle bought McNeil's manufacturing arm in February for 137 million pounds and has since said it will invest 40 million pounds to double capacity at the plant in McIntosh, Alabama.

Health officials from 192 states in May approved the World Organization's proposal to fight obesity, recommending that consumers limit intake of fat and sugar.

Cereal Prices

Earnings at Tate & Lyle's Amylum starch business in Europe were better than expected as cereal prices dropped. Record crops of corn in the U.S. and wheat in Europe have cut costs to make starches, syrups and ethanol, a type of fuel. The U.S. corn crop is forecast to rise 15 percent this year to 3.15 billion metric tons, the Department of Agriculture said on Oct. 12. The European Union's wheat harvest is 27 percent greater than last year, at 134.8 million tons, according to the London-based International Grains Council.

Tate & Lyle's Silvertown refinery in East London makes about 40 percent of the U.K.'s sugar. EU sugar companies, bound by production quotas, are investing in products such as food ingredients, slimming aids and alternative fuels to expand.

Chief Executive Iain Ferguson, 49, has focused on expanding sales of food ingredients since coming to Tate & Lyle in May 2003 from Unilever NV, the maker of Dove soap and Lipton Tea. Suedzucker AG, Europe's largest sugar producer, on Oct. 15 said food additives and frozen pizza helped boost profit by 22 percent in the second quarter. Danisco A/S, Scandinavia's monopoly sugar supplier, attributed its 58 percent jump in first-quarter profit to a food-ingredients business acquired in June.

To contact the reporter on this story: Peter McGill in London at at pmcgill1@bloomberg.net

Last Updated: November 4, 2004 02:30 EST