Purecircle expects full-year results to be in line with expectations

6th Jul 2015 11:56

Provider of natural sweeteners to the global food and beverage industry PureCircle said its sales for the second half of the year will rise despite a hit from the weakening of certain sales currencies.The company expects sales to be $84m during the second half of the year and not less than $127m for the full-year ended 30 June 2015, an increase of 26% on an annualised basis. PureCircle said all its regions have seen growth in sales driven by accelerating market adoption of stevia, a sweetener and sugar substitute extracted from the leaves of the plant species Stevia rebaudiana.Margins will be hurt by a tightening of leaf supply in China, but the company remains optimistic thanks to an increase in investments in leaf divertisfication in South America and Africa.The company was also hurt by foreign exchange rate volatility resulting in a $5m sales impact.On the bright side, it expects growth in sales volumes and revenues to result in an increase in net profit of 7% to £4m and earnings before interest, taxes, depreciation, and amortisation up 16% to $40m.Chief executive Magomet Malsagov said: "Stevia products are still in the roll-out phase in many important markets and until market consumption smooths out, growth will come with a lumpy sales profile and therefore some volatility: this adds some complexity to our ability to provide guidance in the short term."However, Malsagov added that the board is confident of the company's future prospects and of "continued long term sales growth and profitability".Numis analysts said: "The update is disappointing, but sales at constant forex were close to our expectation and the higher leaf costs issue identified [earlier] clearly proved far more costly than was expected."However, the broker maintained its 'buy' recommendation and added: "Stevia uptake continues to grow apace though and it remains the case that the business model should be highly leveraged to extra sales."The company's shares were up 0.43% to 408p on Monday at 1155 BST.