Shares in PureCircle dropped today (29 March) after the UK-listed stevia supplier reported widening half-year losses and said it would not be until next year that it achieved “strong” sales growth.
PureCircle booked a net loss after tax of US$13.1m for the six months to the end of December, compared to $7m a year earlier.
The company’s bottom line was hit by one-off costs as PureCircle slowed down production as customers used their existing stocks. Excluding those costs, PureCircle’s losses narrowed, albeit slightly, to $6.8m.
Its gross profit almost doubled from $900,000 to $1.7m although gross margins fell due to the less than efficient use of production capacity as customers reduced orders.
Sales did increase, rising 11.8% to $15.2m due to natural flavours launched during the period. However, PureCircle said there were “no sales” to its key beverage customers as they used existing stocks.
PureCircle was cautious about the outlook for sales. The company insisted recent EU approval for the ingredient and the “continued growth” in its use “across food and beverage categories” meant it was “confident of the long term future of high purity stevia”.
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However, it added: “We do not expect to see rapid sales growth until calendar year 2013 and calendar year 2014 when the combination of EU approval, the launches of major stevia sweetened CSDs and the unwinding of beverage global key account inventories take fuller effect.”
Stevia has initially mainly been used in carbonated soft drinks and PureCircle admitted it did not expect any “significant demand” from those clients in the remainder of its financial year. It said: “We believe significant beverage global key account demand will now only kick in from calendar year 2013 and calendar year 2014.”
In January, CEO Magomet Malsagov said PureCircle expected “an uptick in growth” from the second half of its current financial year, although he said the company’s ” guidance for sustained levels of market demand” was “mid- to long-term based”.
Shares in PureCircle were down 13.14% at 102.5p at 11:42 BST this morning.