Despite a hefty reported full-year loss, PureCircle (PURE), which produces natural, low-calorie stevia-based sweeteners, is making progress. Indeed, that loss reflects historic factors - the cost base from an expansion a few years back to cope with volume growth that was cut short by the downturn. But volumes appear to be picking up sharply now.
In fact, PureCircle is highly leveraged towards volumes - a robust sales hike in the period, driven by an 89 per cent rise in high purity stevia volumes, helped the gross margin to expand from 11 per cent to 26 per cent. That, in turn, helped convert last year's underlying $9.2m (£5.8m) cash loss to an $8.8m cash profit.
This growth was largely down to stevia becoming a more mainstream sweetener - it's being adopted by a rising numbers of food and beverage makers. PureCircle's range of product blends also contributed to growth, with volumes there more than doubling in the year to account for over half of group sales. However, production levels remain a long way from reaching maximum capacity and, in anticipation of volume increases over the next two years, inventories have been built up - which has resulted in a $10.6m operating cash outflow.
It could be a while before PureCircle turns profitable, but broker Numis Securities expects sales of $102m for 2014.
| PURECIRCLE (PURE) | ||||
|---|---|---|---|---|
| ORD PRICE: | 347p | MARKET VALUE: | £571m | |
| TOUCH: | 343-350p | 12-MONTH HIGH: | 389p | LOW: 179p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 86¢* | NET DEBT: | 54% | |
| Year to 30 Jun | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2009 | 60.0 | 11.5 | 8.52 | nil |
| 2010 | 60.8 | 1.17 | 0.71 | nil |
| 2011 | 53.3 | -19.5 | -11.9 | nil |
| 2012 | 45.4 | -26.7 | -15.1 | nil |
| 2013 | 71.2 | -9.48 | -5.80 | nil |
| % change | +57 | - | - | - |
Ex-div: - Payment: - *Includes intangible assets of $32.5m, or 20¢ a share £1-$1.59 | ||||
