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Fevertree Drinks PLC shares surged on Tuesday, after it confirmed strong half-year top-line growth, and backed revised guidance despite intensifying cost headwinds.
The London-based drink mixers producer said revenue rose 14% to £160.9 million in the six months that ended June 30 from £141.8 million a year prior.
Fevertree shares were 13% higher at 1,068.00 pence each in London on Tuesday morning. The stock is down 61% in the year-to-date, however, as profit margins have suffered of late.
The revenue growth was seen across all markets, and led by a 27% rise in total European revenue, which came in at £52.3 million.
‘Fevertree has delivered a robust revenue performance in the first half of 2022, with a particularly strong performance in Europe as the On-Trade recovered,’ said Chief Executive Officer Tim Warrillow.
UK On-Trade sales rose 73% compared to 2021; a year hit by lockdowns and restrictions. Fevertree now boasts a 50% value share in the On-Trade mixer category.
UK Off-Trade sales faced a tougher comparator, decreasing 21% year-on-year.
‘Despite this, Fevertree has grown volume share within the category, is in more UK households than any other mixer brand, and remains the leading premium mixer brand at UK retail,’ the firm asserted.
Off-Trade refers to sales via grocery stores and other shops, while On-Trade is sales via restaurants, bars and pubs.
In the US, revenue grew 11%. Demand was ‘significantly ahead’ of this result, Fevertree said, but the period was hit by inventory restrictions. These were caused by disruption to trans-Atlantic shipping and slower-than-expected production on the East Coast, and have eased since the end of the period.
Despite the strong top-line performance, pretax profit fell a sobering 30% to £17.6 million from £25.3 million.
This was as gross margin fell by 670 basis points to 37%, as a result of rising costs of logistics across the industry, as well as higher product costs. This was only partially offset by pricing actions in established markets and improved sales mix.
For the first half, the tonic maker recommended a dividend of 5.63 pence, a 2.0% increase from 5.52p a year before.
Noting the firm remains ‘highly mindful’ of cost impacts and an ‘exceptionally challenging environment’, Warrillow added: ‘We do expect to see a gradual decrease in our exposure over the medium term.’
Fevertree reiterated its revised full-year revenue guidance of £355 million to £365 million, with earnings before interest, tax, depreciation and amortisation range of around £37.5 million to £45 million.
Gross margin is expected between 33% to 35%.
In 2021, it achieved £311.1 million revenue, with Ebitda of £63.0 million, and a gross margin of 42%.
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