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Treatt PLC said on Tuesday its annual profit fell despite a revenue rise, while its expected future growth opportunities in the US and China, as well as in coffee.
The Suffolk, England-based natural extract producer for the drinks and fragrance industries said its pretax profit in its financial year that ended September 30 fell by 18% to £16.2 million from £19.6 million a year ago, while its revenue was up 13% to £140.2 million from £124.3 million. Profit was still lower as cost of sales increased by 23% to £101.1 million from £82.1 million. Meanwhile, administrative expenses rose by 15% to £23.9 million from £20.9 million.
It also declared a final dividend for its financial 2022 of 5.35 pence, down 2.7% from 5.50p a year prior. This brought the total financial 2022 dividend to 7.85p, up 4.7% from 7.50p.
Treatt said its revenue growth was underpinned by sales growth across all of its product categories except hard tea, while its declining profit was caused by a margin impact in hard tea, a foreign exchange hit, input cost increases and Covid-19 lockdowns in Shanghai, where its China facility is located.
Chief Executive Officer Daemmon Reeve said Treatt was encouraged by growth opportunities from new and existing customers, particularly in the US and China, as well as in its coffee products.
‘As demonstrated most recently during the pandemic, beverages are seen as affordable luxuries and provide great resilience in difficult economic times, and the market trends towards healthier, natural products continue to support our strategy,’ said Reeve, remaining optimistic for Treatt’s outlook despite macroeconomic challenges such as rising interest rates and inflation.
Treatt also added it transitioned the vast majority of its UK production to a new £5.0 million purpose-built facility, expecting production capacity to double once the process is expected to be fully completed during its financial 2023.
Shares in Treatt were up 0.6% to 668.00p each in London on Tuesday morning.
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