By Sarah Young
LONDON (Reuters) - British food ingredients company Tate & Lyle (L:TATE) warned that annual profits would be below the range it forecast in September, hit by a weak performance from its sweeteners business and sending its shares tumbling.
The latest downgrade represented Tate & Lyle's third profit warning in a year after it had previously cut guidance in September.
The company behind the Splenda brand, Tate & Lyle said on Friday that group profits for the year ended March 31 were now expected to be "modestly below" the 230 million pound to 245 million pound range it had previously guided to in September.
Tate & Lyle blamed a weak performance by its bulk ingredients unit, which sells products such as sweeteners, corn syrup and industrial starches, in the third quarter. It did not expect conditions in those markets to ease in the fourth period.
Transport capacity constraints in the U.S., weaker EU sugar prices and a deterioration in ethanol margins were behind the hit to its bulk ingredients unit, it said.
In the bulk ingredients sector, prices are volatile due to fluctuating commodity costs and intense competition. Tate & Lyle has been trying to move into higher-margin speciality ingredients like oat proteins and artificial sweeteners.
Shares in Tate & Lyle, which have lost about a quarter of their value over the last 12 months, were down 13.6 percent to 573.3 pence at 0820 GMT, wiping out over 400 million pounds from its 3 billion pound market capitalisation at the opening.
The September guidance was itself a reduction from a forecast for profit of slightly below the 322 million pounds reported in the last financial year.
Analysts at Jefferies said they were downgrading their forecasts for the current financial year by seven percent.
"Bulk is underdelivering and supply chain issues are now revealed to have done permanent damage," the analysts said.
"The problems remain primarily those of execution, which should be fixable," they added.
Problems surfaced last February when Tate & Lyle cut its annual profit outlook, citing a dramatic drop in prices of its sucralose artificial sweetener and weak sales volumes in developed markets.