UPDATE 2-Sweetener maker Tate & Lyle warns of lower annual revenue on softer demand
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Lower annual revenue expected for year to end-March
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Posts 4% drop in Q3 revenue
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Annual core profit outlook unchanged
(Adds detail on pricing and destocking in paragraphs 4-5)
Feb 21 (Reuters) - British food ingredients maker Tate & Lyle on Wednesday forecast its annual revenue would fall "slightly" from the previous year, pointing to softer demand and persistent de-stocking by customers.
The company, one of the world's biggest producers of sweeteners, posted a 4% drop in revenue in its third-quarter to end-December. Its shares were down 1.5% by 1132 GMT.
"In Food & Beverage Solutions, volume and revenue were lower ... due to a combination of softer consumer demand and customer de-stocking ... and some customers phasing orders into the fourth quarter when new calendar year contracts, which included the pass-through of input cost deflation, came into effect," CEO Nick Hampton said in a statement.
A rush to stock up on ingredients during the pandemic and higher prices due to inflation had helped lift revenue for many companies but volumes have fallen over the past year as customers use up stock.
However, analysts at Berenberg said there were signs of destocking headwinds fading, helping a return to volume-led growth and margin progression.
Tate & Lyle, which supplies ingredients for Splenda, the sweetener in Diet Coke and other sugar-free drinks, retained its annual core profit growth forecast of 7% to 9% for the year to end-March.
Revenue is expected to be slightly lower than the 1.75 billion pounds ($2.21 billion) in the prior 12 months, reversing an earlier forecast for a small improvement.
It expects the renewal of customer contracts for 2024 to deliver a sequential improvement in volume growth as the year progresses, building on January's strength after customers phased orders from the previous month.
($1 = 0.7930 pounds) (Reporting by Prerna Bedi in Bengaluru; Editing by Sherry Jacob-Phillips, Kirsten Donovan)
