LONDON (Reuters) - British food ingredients firm Tate & Lyle (L:TATE) said lingering supply chain problems and a more competitive market for its Splenda sucralose sweetener would hit annual profit, sending its shares to a three-year low.
The company, which sells ingredients to packaged food and drinks makers, said on Tuesday it had not been able to rectify supply chain hitches, initially caused by the prolonged and severe winter in the United States.
Shares in Tate & Lyle slumped 18 percent to 601 pence by 0802 GMT (9.02 a.m. BST), more than wiping out the gains since a profit warning in February, which came after a dramatic drop in sucralose prices because of cheaper Chinese rivals.
"The disruption to our global supply chain persisted longer than we anticipated, caused by challenges in our plant network, low absolute levels of inventory and misalignments between customer demand and inventory availability," it said.
Tate & Lyle said volumes for Splenda would be lower than it forecast in July which would erode the price it could get by 25 percent for the full year, more severe than the 15 percent decline it forecast in February.
The company said it would cost another 20 million pounds in its second quarter to fix the supply chain, taking the total for the first half to 40 million pounds, plus an additional 10 million pounds in the second half.
The additional costs, and the Splenda performance, meant group adjusted profit before tax for the year to end-March 2015 would be in range of 230 to 245 million pounds.
Analysts had expected pretax profit to come in at 293 million pounds, according to a Thomson Reuters poll of 13 brokers.
(Reporting by Paul Sandle; editing by David Clarke)