• PureCircle FY losses grow
  • Sales fall but PureCircle points to higher volumes
  • Insists "confident" in future of sweetener
PureCircle "confident" of future of its stevia business

PureCircle "confident" of future of its stevia business

Stevia supplier PureCircle today (11 September) insisted it was still confident about the future of the natural sweetener despite its losses widening in the last 12 months.

UK-listed Pure Circle reported a loss after tax of US$23.3m for the year to the end of June, compared to a loss of $18.5m a year before.

The company, which supplies the likes of PepsiCo, Merisant and Danone with the zero-calorie sweetener, said it incurred foreign exchange costs of $2.1m over the year. However, sales fell 15% to $45.4m.

Nevertheless, chairman Paul Selway-Swift said volumes were higher and said recent sales trends gave the company confidence in the potential of the stevia sector.

"FY 2012 was the first year that our sales were not supported by committed take-or-pay contracts. Despite this our high purity sales volumes increased. Further some 85% of sales comprised demand that did not exist three years ago. This augurs well for future sales growth," Selway-Swift said.

He said PureCircle's move to slow production of reb A, the extract from the stevia plant used to produce sweeteners, had affected its performance.

"Our recent results have been impacted by the tough decisions we made in 2011 to slowdown reb A production temporarily to better align inventories to current market demand. Results should improve as the evident growth in market usage of our products starts to translate into higher sales," he said.

Selway-Swift added it would be 2013 or 2014 before the food and drink sector used stevia on a "mass" scale.

"Our guidance remains that it is likely to be calendar years 2013 or 2014 before mass volume adoption of high purity stevia is evident and the benefits of increased usage starts to be reflected in our results," he said. "We remain confident of the future of our high-purity stevia business but continue our guidance that this should be seen as a mid to long term opportunity."

Shares in PureCircle were down 1.7% at 173p at 09:53 BST.

Show the press release

 

RNS Number : 9304L
PureCircle Limited
11 September 2012

PURECIRCLE LIMITED

FY 2012 RESULTS

PureCircle (www.purecircle.com) the world's leading producer of and marketer of high purity stevia ingredients announces its audited results for the financial year to 30 June 2012 (FY 2012) together with audited comparatives for the year ended 30 June 2011 (FY 2011).

1.1  HIGHLIGHTS FOR THE YEAR

Financial Highlights

The audited results for FY 2012 comprising the Group's consolidated statement of comprehensive income, statement of financial position and statement of cash flows are set out on page 10 to 14. The Group's full Annual Report and accounts will be posted to shareholders in November 2012. A summary of the financials for FY 2012 with FY 2011 comparatives is set out below.

Summary financials

 

 

FY2012

 

FY2011

 

 

USD'000

 

USD'000

Sales

 

45,412

 

53,262

Gross Profit

 

4,897

 

4,100

Foreign exchange

 

(2,144)

 

5,241

EBITDA

 

(15,171)

 

(9,902)

Net loss after tax

 

(23,278)

 

(18,502)

 

Net cash from operations,

before interest and financing

 

4,513

 

(10,453)

Inventories

 

73,656

 

96,503

Cash and short term deposits

 

24,288

 

43,137

Net debt

 

(78,063)

 

(70,871)

Gross assets

 

233,349

 

266,719

Net assets

 

119,476

 

143,058

 

Sales: In FY 2012 sales were $7.8m (15%) lower than FY 2011. This reflected FY 2012 being the first year in the Company's history with no pre committed "Take or Pay" contracted sales, which had totalled $22m in FY2011 ($29m in FY 2010 and $54m in FY 2009). Our non "Take or Pay" high purity sales have increased from $6m in FY2010 to $39m in FY 2012, with FY 2012 volume growth of 125%     

Sales volumes: In FY 2012 total volumes of high purity stevia increased by 26%. Volume increases were led by sales of the portfolio of proprietary new ingredients introduced over the past eighteen months (Alpha, SG95, Natural FlavorTM range), each of which increased by more than 100%. The Group has established a portfolio of ingredients and a well balanced mix of sales is anticipated going forward.  

Despite the volume increase, FY 2012 sales levels remained sub-scale and did not reflect the strong growth in end market usage of high purity stevia. This is principally due to the continued impact of inventory at Beverage Global Key Accounts (BGKAs).

Gross profit: In FY2012 gross profit was $4.9m (11% of sales), an increase of $0.8m (19%) over FY2011, despite the lower sales revenues. The Group's variable contribution margin for high purity stevia revenues improved by ten percentage points over FY 2011, reflecting improved product mix and lower variable costs.

Foreign exchange: In FY 2012 the Group incurred foreign exchange costs of $2.1m against gains in FY 2011 of $5.2m, a year on year profit impact of $7.3m.

EBITDA: In FY 2012 the Group's EBITDA was a loss of $15.2m which was $5.3m higher than the loss of $9.9m reported in FY 2011, reflecting the foreign exchange noted earlier. Both years have been impacted by the exceptional costs relating to the temporary slowing down of Reb A production which was effected across CY 2011 so as to reduce Reb A inventory to levels better aligned with current market demand. Production of Reb A increased in early calendar 2012.

In FY 2012 the Group's total cost base reduced by $3m despite supporting higher sales volumes and the Group's $1m share of sales and marketing investment in our EU Joint Ventures.

Net cash from operations, before financing: The Group generated $4.5m of operating cash-flow before interest and financing, a $15m cash-flow improvement on prior year.  

 

Inventories: At $74m inventories are $23m lower than at June 2011 and $40m lower than their peak at December 2010. Further reductions are expected as sales volumes increase before they stabilise at a consistent proportion of sales demand.

 

Cash and net debt: The Group ended FY2012 with gross cash of $24m, net debt of $78m and cash and facility headroom of $44m. Headroom was further boosted after the year end with the $31m proceeds of our Private Placement completed in August 2012. The Group is sufficiently funded for its current expansion plans.

 

Business developments

 

Overview:  With our technologies proven and our production scaled, our business development focus is concentrated on increasing global usage of high purity stevia. There were encouraging developments in usage across FY 2012 that suggests large scale adoption will be apparent during CY 2013 and CY 2014.

 

F&B product launches: Up to August 2012 F&B product launches with high purity stevia are running at a rate of 1,000 new launches for CY 2012, a 65% increase over CY 2011 and taking total products launched with high purity stevia to more than 2,600 (source Datamonitor).  Encouragingly PureCircle stevia ingredients are being used across the full range of F&B product innovation including reformulations of existing mainstream products, brand extensions and new product launches.

 

EU impact: EU clearance for high purity stevia was achieved in December 2011, thus opening up the world's largest single sweetener market. Although it had only modest impact on FY 2012 sales, EU adoption of high purity stevia has been fast and is accelerating with almost 400 launches in the EU. High purity stevia ingredient products are now on sale in 49 countries (both sources Datamonitor).

 

Carbonated Soft Drinks (CSDs): Due to their global ubiquity, CSDs are likely to represent the largest single category volume for high purity stevia. FY2012 saw encouraging progress with a number of high purity stevia sweetened CSD launches notably including the reformulation of Sprite in France in April 2012 and Fanta in China in February 2012.

Wider F&B category penetration: In FY 2012 F&B launches were made in a number of new categories including confectionery, ketchups and dairy.

Customer base: PureCircle is building a diversified customer base. In FY 2012 we sold to 121 different customers around the world, counting each Global Key Accounts as just one customer. Our largest customer in FY 2012 represented 8.5% of revenues and was not a Beverage GKA and our top ten customers amounted for only 60% of sales. The numbers of orders we process has increased with a current monthly average in excess of 100 customer orders.

Geographical spread: In FY 2012 the Group sold to 47 different countries of destination. The USA now represents 40% of total sales, with strong growth in sales to China, Mexico, Europe and Brazil.

Regulatory: High purity stevia now has regulatory approval in most major markets. FY2012 approvals included Indonesia and Philippines as well as the EU. The key remaining countries are India, Canada, Thailand, South Africa and Canada. Approval is expected in all of these before end June 2013 and will provide a further 1.6 billion new consumers with access to high purity stevia.

PureCircle product portfolio: FY2012 was the first full year of sales for our proprietary ingredients SG95 and Natural FlavorTM range; in addition in FY 2012 we launched Alpha. Reb A represented just 40% of our total revenues (FY 2009: 90%). Our enhanced ingredient range comprises new products developed specifically in response to customer needs and they are proprietary. Market response has been positive, with year on year sales growth well in excess of 100% and pipeline growth even higher.

PureCircle's innovation is what sets us apart in the industry and we have further innovative product plans in the pipeline.

Technical support: We have expanded our technical support opening application laboratories in key markets such as Europe (UK), China and soon Mexico. We have developed the PureCircle University programme in response to customer demand for direct access to our technical support. Launched in FY 2012 this already has a strong pipeline of customer participation and is building deep relationships.

Stevia advocacy and sustainability initiatives: Our initiatives continue to provide real industry leadership and long term value for PureCircle.

-      The PureCircle Stevia TrustmarkTM is now used on 160 products launched across 32 countries with additional product launches in the pipeline for FY 2013. 

-      Our carbon and water footprint audits are being developed further to provide clear consumer benefits to our customers

-      Our Insights Group is building market studies directly in partnership with key customers

-      The Global Stevia Institute (GSI) is now established with advisers active across 4 continents. The GSI now attracts 3,000 subscribers to its monthly newsletter 

Joint Ventures: With the opening of the EU market, FY 2012 saw the first sales contributions from our Joint Ventures. The pace of F&B launches in the EU suggests that the JVs will experience sales growth in future years.

Supply chain: In FY 2012 our supply chain supported overall sales volume increases of over 26% and delivered new product volumes up more than 100% on a lower cost base and with reduced variable costs. This provides a platform for improved profitability as sales volumes increase. The true extent of the production efficiency gains made in FY 2012 is masked by the one off costs and the higher production overheads charged to profit due to lower inventory levels.   

Commenting on the audited results, the Chairman Paul Selway-Swift said:

"FY 2012 was the first year that our sales were not supported by committed "Take or Pay" contracts. Despite this our high purity sales volumes increased. Further some 85% of sales comprised demand that did not exist three years ago.  This augurs well for future sales growth.

Our recent results have been impacted by the tough decisions we made in 2011 to slowdown Reb A production temporarily to better align inventories to current market demand. Results should improve as the evident growth in market usage of our products starts to translate into higher sales.

We remain confident of the future of our high purity stevia business but continue our guidance that this should be seen as a mid to long term opportunity."

Enquiries:




PureCircle Limited (www.purecircle.com)

                                                                  

Magomet Malsagov, CEO

+603 2166 2206

William Mitchell, CFO

+44 7974 005 163

RFC Ambrian Limited (NOMAD)

Steve Allen

 

+61 8 9480 2500

For the full release, click here.

 

Original source: PureCircle