12th Sep 2024 09:18
(Alliance News) - Fevertree Drinks PLC posted tepid half-year revenue, as the mixers maker as soggy weather caused the mixers maker's sales to fall short.
Fevertree reported a "subdued consumer backdrop and poor weather in the second quarter across the UK and Europe".
Shares plunged 10% to 775.90 pence each in London on Thursday morning.
Revenue in the half-year to June 30 fell 1.5% to GBP172.9 million from GBP175.6 million.
Pretax profit, however, jumped to GBP13.2 million from GBP1.4 million. Cost of sales were 8.9% lower at GBP110.9 million from GBP121.8 million.
"The Fever-Tree brand performed well against a tough market backdrop. We continued to deliver double digit revenue growth in the US at constant currency, as well as a strong performance in our ROW region. The first half performance in the UK and Europe was impacted by unseasonable weather at the start of summer alongside distributor order phasing in Europe, but we have seen a strong improvement in these regions as the summer belatedly arrived," CEO Tim Warrillow said.
The firm explained it has made a "strong start to the second half of the year across all of our regions". It expects to deliver Fever-Tree brand revenue growth of 7% to 10% on-year in the half, giving it growth of 4% to 5% for the whole of 2024.
Fevertree upped its interim dividend by 1.9% to 5.85p per share from 5.74p.
Wealth Club analyst Charlie Huggins commented: "It seems like Fevertree can't catch a break at the moment. After an annus horribilis in 2023, 2024 was supposed to be the year when sales came roaring back. Instead, bad weather in the UK and Europe and delayed ordering has resulted in broadly flat sales in the first half."
But Huggins said it was not just the poor weather which took some sting out of Fevertree's sales.
"Weak consumer sentiment and a normalisation of alcohol consumption following the pandemic has impacted the whole spirits and mixer category. The upshot is that Fever-tree expects sales to grow only 4-5% this year, versus previous expectations of closer to 10% growth. It isn't all bad news. A significant easing of cost pressures has led to a big improvement in margins. With inflation continuing to moderate, this trend looks like it could continue. The weather Gods were also more kind in July and August, meaning the second half has got off to a better start," the analyst said.
"However, what Fever-tree really needs to get sales fizzing is a recovery in the wider spirits and mixer category. And there is no sign of that yet."
By Eric Cunha, Alliance News news editor
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