PureCircle grows as stevia sweeteners win traction

PureCircle, the stevia sweeteners group, kicked its habit of disappointing trading announcements by unveiling sales up 80% and a sharp narrowing in losses, helped by the spread of its customer base to the key cola market.

The group which is headquartered in Malaysia, listed in London and has its sales office in the US said that its sales for the July-to-December half had soared to $27.3m, from $15.2m in the same period of 2011.

The increase, which by volume was 135%, represented growth "across" the PureCircle portfolio of low calorie sweeteners based on stevia, a relative of the sunflower.

And it will see earnings before interest, tax, depreciation and amortisation show an 80% "improvement" over with the $8.9m loss reported in the last half of last year.

'New deals'

The improvement reflected the continued spread of stevia as a low-calorie alternative to conventional sweeteners including the important carbonated softs drinks category.

Besides the launch of stevia-sweetened Sprite in Ireland, the first cola containing the product, and provided by PureCircle, was in September launched in Australia, under the Pepsi Next label.

PureCircle has also sealed contracts with Coca Cola, and has received interest from the likes of Danone, for using stevia sweeteners in yoghurts, Kraft, for use in flavourings, and Unilever, as a ketchup ingredient.

"New long-term supply and joint development agreements with major global food and beverage companies have been signed adding to our already strong portfolio of global key accounts," Magomet Malsagov, the PureCircle chief executive, said.

"Across the world, large food and beverage brands began to adopt our ingredients."

'Extremely positive'

The comments follow a string of trading updates, in which the group has failed to live up to the bright hopes it foresees for its market.

In September, it revealed annual sales down 14.7%, despite the products containing stevia soaring by 65%.

The company's underperformance has been blamed on an initial investment wave which led to overcapacity and a build-up in inventories.

However, Monday's update was termed "extremely positive" by Numis analyst Charles Pick, who said that, while he had left unchanged his projections for PureCircle earnings in the year to the end of June, "there could be scope for upwards revisions".

While Numis cut to "hold" from "add" its rating on PureCircle shares, that reflected a rise in the stock to close to the broker's target price of 270p.

The shares closed up 0.2% at 251.5p.

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