13 Jan 2011 07:00
PureCircle Ltd (PureCircle or 'the Company')
Trading Statement
PureCircle (LSE: PURE), the world's leading supplier and marketer of high purity stevia products provides the first of a regular series of updates on the overall high purity stevia market and an update on the Company's progress since 30 June 2010.
OVERALL HIGH PURITY STEVIA MARKET UPDATE
Key Market Data
The Key Market Data table is based on Nielsen USA consumer retail sales for the Food Drug and Mass (FDM) channels for the quarter to 30 September 2010:
Key Market Data | ANNUALISED DATA FOR QUARTERS | CHANGE VS PRIOR (%) | |
30-Sep-10 | 30-Sep-09 | Sep 2010 vs Sep 2009 | |
(1) Annualised USA Consumer retail sales of products containing high purity stevia: $m | $995 | $488 | 104% |
(2) PureCircle share of USA F&B high purity stevia ingredient market % ** | 94% | 96% | |
**: excludes table top sweetener category, includes indirect sales | |||
Source (1): Nielsen retail sales data for stevia labeled products in the FDM channels for the quarter to 30 September 2010, adjusted by PureCircle for non FDM distribution channels, and then annualized.
Source (2): PureCircle analysis of products launched using high purity stevia, excluding table top sweetener category
High Purity Stevia Market update
·; Annualised USA consumer sales for products using high purity stevia amount to US$1bn : just 21 months after the market opened following FDA approval
·; Growth of US$507m (104%) compared to comparable quarter to 30 September 2009
Quarter | Annualised Retail ($mm) |
Q1 2009 | $144 |
Q3 2009 | $488 |
Q1 2010 | $459 |
Q3 2010 | $995 |
Source: Nielsen retail sales data for stevia labeled products in the FDM channels for the quarter to 30 September 2010, adjusted by PureCircle for non FDM distribution channels, and then annualized.
·; Stevia table-top sweeteners continue to win market share in the USA and France.
·; Qualitative data from other markets, such as Mexico, France, Australia shows consumer sales increasing at similar rates
·; Analysis of the ingredient usage by non table top food and beverage companies indicates that PureCircle is direct or indirect supplier to more than 94% of the products by both volume and value: it is clear that a mass volume industry could not be developing without PureCircle's scaled production
·; The Company estimates that the $1bn USA consumer sales translates into an annual consumer usage of 150 tonnes high purity stevia in the USA
·; Qualitatively the USA usage volumes imply a global consumer usage of about 200 tonnes, compared to about 50 tonnes a year ago: a volume growth rate of 300%
·; Allowing for retailer store and distribution inventory, annual global Food and Beverage manufacturer usage is estimated at about 250 tonnes
New Product launches
Since 30 June 2010 new product launches across different product categories with high purity stevia have included:
·; USA: SteviaCane Table top , True Lemonade, Arizona Kidz, Wish-Bone salad dressing, Archers Farms Tea, Silk Soymilk extensions, Wonder Smartwhite Bread, Hansen's Natural Drink Mix, FRS Energy drink
·; Latin America: Lala Yomi (Mexico), Canderel Verde (Mexico), Svetia (Mexico), Ste+ (Paraguay), Agua de Bes (Paraguay) and Neotevia (Brazil)
·; France: Ligne de Beghin-Say aux Extraits de Stevia, Taillefine yogurts, Fanta Still, Joker Vital nectars, Breizh Cola, PureVia and Canderel Green table top sweeteners,
·; Australia: Schweppes Carbonated Mineral Water, Orangeade and Limeade drinks, Schweppes Cordial , Lipton Tea and Go Coco flavoured water
·; Other countries: Fanta line extensions (Turkey), PureVia (New Zealand)
Our contracts and market analysis show that PureCircle is the supplier for the principal part of the new launches
Market intelligence suggests that more new product launches are being planned in all regions.
PURECIRCLE BUSINESS DEVELOPMENT UPDATE
Since 30 June 2010 the Company has continued to secure additional sales contracts and new invoicing customers.
·; We have secured a global supply contract with another of the world's largest ten Food and Beverage companies, making PureCircle direct supplier to seven of the top ten such companies.
·; We have 23 new direct invoicing customers, taking the total to more than 130.
PureCircle sales update
·; The Group's sales for FY 2011 will be second half weighted including the call-off timing of committed volumes. The Company is expecting to report sales of $13m in the first half to 31 December 2010.
·; Analyst consensus estimates for FY 2011 sales are in the range $69m to $78m. As at 31 December 2010 the Company has invoiced, committed and FY2011 pipeline sales totaling $50m.
·; The balance is work in progress which will be updated on a quarterly basis, with the next update in March 2011.
·; As clear market leader, the Company's sales growth is expected to mirror the strong accelerating growth in consumer usage evidenced by the Nielsen data.
·; In particular, usage increases as products using stevia mature in their life cycle (eg products use more at an established launch stage than at R&D stage). The Company will benefit from having more customers further developed in their product cycles than in prior periods. This is illustrated in the table below, showing the number of direct customers at each stage of the product launch cycle at 31 December 2010 and 2009 respectively
Year | R&D | Initial Launch | Established Launch | Multi-Market Rollout |
2009 | 32 | 15 | 4 | 0 |
2010 | 69 | 40 | 38 | 5 |
PureCircle Operational update
Our operational progress in FY 2011 continues to track our long term objectives.
Leaf
·; PureCircle has again been the major procurer of leaf in the 2010 China harvest.
·; We have secured the volumes and quality of leaf we need for FY 2011
·; We continue to develop Africa and South America as major long term leaf suppliers, based around our subsidiaries in Kenya and Paraguay
·; Our research projects for future generations of leaf are on track with project milestones.
Production
·; In FY 2010 we demonstrated that our production was scaled to meet the requirements of mass volume industry
·; In FY 2011 we have added production flexibility that will allow us to produce our entire range of high purity stevia products in scale and without compromising production margins
·; In the six months our facilities have completed successfully a growing number of customer audits
·; Our variable costs are trending lower in line with our long term business planning
Research & Development and Intellectual Property
·; The Group has secured important USA patent confirmations for its process technologies that cover all key aspects of PureCircle's high purity stevia business.
·; The patents granted are effective December 2004 and give PureCircle clear prior usage over all other high purity stevia claims across the industry.
·; This confirms the Company's leadership position as the supplier and strategic partner of choice for the industry.
·; The Group has over 50 further patent applications in progress covering applications for all main food and beverage categories and covering a range of next generation product opportunities.
·; The Group has successfully developed the technology and completed production of high purity (>70%) Mogroside V (from Luo Han Guo).
·; The new high purity Mogroside V product offers considerable benefits against the standard FDA GRAS approved purity products (>30% purity). Full process patent and FDA GRAS applications are in progress.
·; High purity Mogroside V will provide an important complementary flavor tool to the Group's high purity stevia sweetening range.
Other industry developments
·; Our partnership with Dohler is accelerating wider application development particularly combining stevia with Dohlers fermentation and formulation leadership.
·; Since June 2010 steviasucrose products have been launched for retail consumption in both the USA and France.
·; The Group continues to lead the development of quality and measurement standards. Initiatives include the development of a new Steviol Glycoside monograph standard for the USP Food Chemicals Codex in cooperation with USP and Cerilliant.
JOINT VENTURES
Since our September results announcement, our Joint Venture with Tereos has become fully operational and the collaboration is being well received in the market.
Business planning is progressing well with our partners British Sugar and NordZucker.
ORGANISATION
We have strengthened our finance management with the promotion of Mr Chin Yoong Foo to the role of VP Group Controller and the appointment of Ms Annie Wong as VP Corporate Planning and Treasury, both reporting directly to the Group CFO.
FY2011 HALF YEAR RESULTS
Our FY 2011 half year results announcement will be made on Monday 21 March 2011.
For More Information
PureCircle Limited (www.purecircle.com) | |
Magomet Malsagov, Managing Director | +60 1 2388 8049 |
William Mitchell, Finance Director | +44 7974 005 163 |
Westport Communications | +44 20 7065 2690 |
Alan Frame | alan@westportcomms.com |
Jeanette Bishop | jeanette@westportcomms.com |
NOMAD: RFC Corporate Finance Ltd | +61 8 9480 2500 |
Stephen Allen |