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Fever-Tree profits at the lower end of its guidance
Having forecast an annual core profit of £30m to £36m, the tonic company has revealed it will come in at the lower end of that bracket, but grabs the biggest slice of the on-trade mixer market.
Fever-Tree says its annual core profit will come up short of market expectations when it announces its 2023 results at the end of March.
Despite profit doubling in the six months to the end of December, Fever-Tree now predicts its annual profits will be about £30 million compared with its previous forecast of up to £36 million, and analysts’ forecasts of about £33 million.
The main reason is the continuing pressure from energy costs, especially for glass.
However, there are signs of improvement, especially in the US, Fever-Tree’s biggest market by revenue, where sales values increased by 22% in the second half.
The group’s total revenue was 6% ahead of the second half of 2022 and it forecast a significant improvement in gross margin for 2024, underpinned by new glass contracts with fully hedged energy pricing and lower Trans-Atlantic freight rates.
Total revenue in the UK was ahead of expectations reflecting a strong end to the year in the on-trade and the company says it now has its strongest ever share of the market by revenue.
It believes total revenues will rise by 10% this year.
Chief executive Tim Warrilow said: “The Fever-Tree brand has performed well in 2023, growing our market share in all of our key markets, despite a challenging macroeconomic environment. The US ended the year as our largest region, where we have extended our leadership position in both the Tonic and Ginger Beer categories.”
He went on to say: “We have driven a significant increase in our EBITDA margin in the second half of the year and are confident that the operational efficiencies we have implemented, alongside a reduction in inflationary cost pressures, will drive a doubling of EBITDA in 2024 and provide a strong platform for profitable growth going forward.”
Separately, Britvic said that strong trading during the Christmas season meant its full-year results should be in the range of market expectations.
In the three months to the end of December, Britvic revenues grew by almost 18%, reflecting price rises and extra sales volumes of 6.4%.
In the UK, sales grew by 6.9% with progress in both the retail and hospitality channels.