GLG reported sales of C$1.7m across its stevia and Chinese consumer beverage businesses, down from C$20.9m for the same period last year. It also reported a net loss of C$26.6m, compared to a net profit of C$1.6m in Q3 last year.
“Stevia sales for the third quarter 2011 were down by 97% compared to the third quarter in 2010, which was driven by lower demand for the company's products during the third quarter from its customers,” the company said.
“…The end customers had experienced formulation challenges with stevia (aftertaste problems) and this had led to longer R&D projects and product launch delays.”
The company also said that it has renegotiated its 10-year supply agreement with Cargill – its biggest stevia customer – and Cargill would no longer be obliged to purchase the sweetener exclusively from GLG from September 30, 2011.
Shares in the company fell as much as 26% on Monday morning, and it posted a loss of 41 Canadian cents per share on an adjusted basis, compared to an expected loss of 17 cents per share, according to Thomson Reuters analysts.
Pooya Hemami, an analyst at Desjardins Securities, said in a statement that there were some positives for the company, with EU approval of stevia expected to allow product launches in Europe as soon as early December, and completion of a 10,000 tonne facility for GLG's partner in the Chinese ‘Healthy Sugar project'.
"Nonetheless, we believe these positives will be overshadowed by weak financial results, poor business visibility and the loss of exclusivity sales provision with Cargill," Hemami wrote.
Last month, the company issued a business update in which it warned that its revenue would likely be hit by lower than expected demand from consumers in China for its Chinese beverages, which it sells through AN0C, a China-based subsidiary company, as well as problems at two Chinese bottling plants.
When announcing its Q2 results in August, the company cut its full-year revenue outlook from C$160m-C$200m to $130m-$170m.