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Sales at PureCircle (PURE), which is one of the largest stevia producers in the world, have climbed by 24% to $43.2m (£29.2m) in the company’s first half. Operating profit and EBITDA were also up by similar amounts (21% to $3.5m and 24% to $6.4m respectively) as gross margin increased 18% to $14.5m.
However, the company posted a loss before tax of $4.4m in the six months to 31 December 2014, widening from $2.4m in the same period a year earlier, thanks to larger cost of sales and administrative costs, as well as $1.3m of other expenses caused by a net foreign exchange loss and other operating items.
PureCircle has been involved in high-profile roll-outs integrating stevia into mainstream products in the past year as big brands seek to fight back in the ongoing war on sugar. There have already been launches of Coca-Cola Life, Pepsi Next and Pepsi True into the US, Mexican, UK, French and Japanese markets, with other categories such as ketchups, yogurts and confectionery also dipping a toe into the sugar-substitute waters.
“The size and breadth of F&B product launches and roll-outs in the first half of FY15 indicate that stevia is well on the way to becoming an important ingredient for F&B companies wishing to moderate calories,” CEO Magomet Malsagov said.
“Further the existing footprint of products launched using stevia provides a sound basis for a multi-billion dollar stevia industry in the years to come.
“In 1H FY15 we again strengthened our position as market leader with further proprietary product innovation and growth in both delivered sales and project pipelines. With sustained long-term growth prospects, PureCircle has started to expand our production capacity and expect this to come on stream in FY17.”
However, the City wasn’t as confident of assured success as rival sugar substitutes, such as Tate & Lyle’s Dolcia Prima, start to appear. Shares in PureCircle plunged 4.2% to 520p upon opening this morning.
Morning update
Elsewhere on a quiet morning for the grocery and retail sectors, Thorntons (THT) fell back below 70p as it dropped 3.4%, Morrisons (MRW) dipped 0.9% to 202.2p, Ocado (OCDO) slipped 1.4% to 383.1p and Sainsbury’s (SBRY) decreased 0.7% to 257.5p.
This week in the City
After a hectic week that saw Morrisons and Waitrose both posted their annual results last Thursday, things are a little quieter in the City this week.
The exception to that is the Sainsbury’s trading statement tomorrow morning, which will update the market on its fourth quarter sales. The signs are that the price war has begun to catch up with the supermarket, which recorded solid growth in 2014 in contrast to listed competitors Tesco and Morrisons.
Sainsbury’s had a strong Christmas, which will help its fourth quarter figures - but trading in 2015 is likely to have been tough. Sainsbury’s, like Waitrose and Asda, is suffering from tough comparatives, but the market will hope that the most recent Kantar 12-week 0.5% sales decline does not translate to an even more significant like-for-like sales decline in its fourth quarter.
Elsewhere, other than PureCircle’s earnings release this morning, the rest of the week looks distinctly quiet. Tuesday also brings and earnings update from Just Eat, but the rush of annual earnings reports is coming to a close.
It’s not the busiest week for retail data either, though there’s more newsflow on the wider economic front.
Wednesday brings the BofE’s interest rate minutes, though they are likely to be fairly straightforward this time given the unanimous decision to keep interest rates at 0.5%. Wednesday also brings the latest UK unemployment figures, while the Chancellor issues a pre-election budget statement at lunchtime.
George Osborne’s statement is unlikely to include any great pre-election giveaways, but it could include a major change to the way business rates are calculated.
Last week in the City
The FTSE 100 had its worst week of the year last week, as the index dropped by around 2.5% during the week to 6,740.6pts.
Grocers and food producers were not to blame as the drop was largely centred on the underperformance of shares in the energy sector, However, the grocery sector didn’t have the best of days on Friday either.
Diageo (DGE) was downgraded by Credit Suisse on Friday, taking the shares down 1% to 1,864p.
The release of the Nielsen supermarket market share figures didn’t do the grocers any favours, despite showing that sales volumes had risen for the third straight month.
Morrisons (MRW) was down 1.7% to 204p, while Sainsbury’s (SBRY) and Tesco (TSCO) were also big fallers - dropping 1.7% to 259.1p and 1.2% to 232.8p respectively.
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