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Shares in Fevertree Drinks PLC crashed on Friday as it warned of a margin hit from higher costs, slashing its full-year profit guidance as a result.
Shares in the company were down 28% at 865.00 pence in London early Friday.
In the first half of 2022, the premium tonic water maker posted revenue of £160.9 million, up 14% from £141.8 million year-on-year.
UK sales rose 6% to £53.5 million and US sales increased 11% to £40.1 million, while total Europe revenue jumped 27% to £52.4 million.
Fevertree said the on-trade sector - being bars and restaurants - showed ‘promising’ signs of recovery in the period.
In contrast, off-trade sales - meaning at-home - fell 21% in the UK as Fevertree lapped lockdown comparatives. However, US off-trade sales more than doubled compared to pre-Covid levels, reflecting the brand's significant growth in the territory over the past three years.
‘Fever-Tree has delivered a solid revenue performance in the first half of 2022, with a particularly strong performance in Europe and demand continuing to build in the US,’ said Chief Executive Tim Warrillow.
However, while holding its annual revenue guidance range of £355 million to £365 million, the firm slashed earnings guidance amid ‘challenging logistical and cost headwinds’.
Fevertree now expects earnings before interest, tax, depreciation and amortisation in a range of £37.5 million to £45 million - down from a prior range of £63 million to £66 million. In 2021, the company achieved Ebitda of £63.0 million.
The company flagged labour shortages in the US, resulting in greater UK production which means greater exposure to increasing sea freight rates. In addition, glass availability has become ‘severely restricted’ and industry-wide cost pressures, such as glass, have increased.
Fevertree expects a further 400 basis points to 600 basis points of margin dilution, anticipating a gross margin around 33% to 35%, which would be down from the 42.1% posted for 2021.
‘Despite the current challenges of the volatile logistical and cost environment, we continue to make good progress across our regions. The strong and growing consumer demand for the brand, our exciting pipeline of innovation, and the growing interest in long-mixed drinks, gives us more confidence than ever in the long-term opportunity,’ said Warrillow.
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