Tate & Lyle is anticipating "steady" growth in sales of Splenda sucralose, its zero-calorie sweetener product, over the next five years, building to a 70% utilization at its two sucralose plants in London and Singapore by 2012, chief executive Iain Ferguson told reporters on a conference call.
Sales of Splenda have disappointed investors over the last year, with the company admitting to a slower-than-anticipated take-up by major customers, leading to "only modest growth" which it described as "a disappointment in what was otherwise a successful year for the group."
It admitted sales have been hit by product development life-cycles returning to more normal levels following the Atkins diet period, the depletion of customers' security stocks in response to new capacity coming on stream, and volumes to the U.S. carbonated soft drink sector not meeting expectations.
Tate & Lyle now expects the global market for high intensity sweeteners to grow by 3 to 4% annually by volume, and expects to increase its market share, which it currently estimates at 28%.
Ferguson said the group sees opportunities for further expansion, particularly in the international market outside of the U.S.
"We've got about a 45% market share in the U.S., a 12% share in Europe and Asia. Those are the next two largest markets (outside the U.K.) and we believe that, over the next few years, we will build the share in both Europe and Asia to match the share we have in the U.S.," he said.
Earlier, the company achieved a third successive year of double-digit pretax profit growth, driven by a strong performance from its food & industrial ingredients businesses which together saw a 36% increase in adjusted operating profit.
Pretax profit before exceptional items for the year to end March came in at 336 million pounds ($665.7 million), compared with 295 million pounds the previous year. That was ahead of market expectations which ranged between 316-334 million pounds. However, the results were overshadowed by a number of warnings from the company in relation to its 2007/8 outlook.
Firstly, it does not expect a repeat of this year's unusually high profits in ethanol.
In addition, the group anticipates that the continuing oversupply of sugar in the EU market will have a further negative impact on its sugar refining businesses.
Tate & Lyle said the anticipated partial disposal of its food & industrial ingredients business in Europe will reduce operating profits, and the commissioning of the Singapore sucralose facility will increase fixed costs, offsetting the benefits of expected continued growth in sales in this division.
The shares closed at 605 pence, down 6.2%.