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PureCircle delighted at stevia progress despite challenges

The group said it now had 20 products in market all derived from the same stevia leaf
PureCircle delighted at stevia progress despite challenges
The group's products are made from the stevia leaf

Sweetener firm PureCircle Limited (LON:PURE) said it's well positioned in the fight against obesity and diabetes, as it posted a 9% increase in sales in its full year just gone.

The firm produces and markets stevia, a sugar substitute, and sales for the 12 months to June 30 were US$138.6mln versus US$127.3mln last year.

Gross margin improved 41% to US$57mln (2015: US$40.3mln), while net profit after tax was 257% higher at US$14.6mln. EPS (earnings per share rose 242% to 8.49 US cents.

The group said it now had 20 products in market all derived from the same stevia leaf, and the improvement in profit and operating cashflow across the last five years underlined its  operational usages.

Positive developments in the year included that sugar taxes are being imposed in the group's major market and that stevia has been approved in Brazil and India

The group conceded that second half sales had been lower than anticipated due to delayed customers launches and US Customs and Border Protection (CBP) actions,

In June, shipments of the sweetener were detained by American border control but later the same month three shipments were cleared for release into the US.

The detention order had been based on an inaccurate allegation that the shipments contained products that were produced using forced labor, the firm had said.

The firm revealed that a number of its shipments remain in detention, despite Customs and Border Protection having received the same documents, the same level of traceability information, and the same audit reports for these shipments as PureCircle and its customer provided to CBP for the three released shipments.

"We continue to actively work with the CBP to address the matter and have our name removed from the WRO (Withhold Release Order)," it told investors.

PureCircle Chief executive Magomet Malsagov said: "Despite challenging market conditions in FY16, I am delighted with the progress PureCircle has made, with strong growth in both revenue and profit."

He added:  "Significant milestones in the year include the approval of high purity stevia in India and Brazil, Reb M approval in Europe and the launch of our Zeta family of new ingredients, closing the taste gap for low or no calorie applications and opening up new F&B categories adoption of stevia.

"These developments underpin our confidence in the long term prospects for our business and support the investments we are making to increase production capacity and further product innovation."

Broker Liberum repeated a 'buy' on the shares but reduces the target price to 500p from 600p.

It says the weak sentiment currently offers a buying opportunity and it remains confident in the long-term growth outlook for stevia and PureCircle’s Number One position.

But it says the US Customs restrictions prompt it to take a more cautious stance for full year 2017 by assuming no resolution until the second half of the group's 2017 year. Beyond full year 2017, it is predicting around 15% of sales growth on a repeatable basis.

PureCircle shares today eased 6.06% to 310p.


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PureCircle Limited Timeline

September 21 2016
July 12 2016

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April 17 2018
The group's major shareholders have staunchly supported the business while the AIM-listed group sorts out its financial position

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