20th Jan 2020 08:37
(Alliance News) - Fevertree Drinks PLC said Monday revenue is expected to come in below board expectations, due to "subdued" Christmas trading in the UK.
Shares in the London-headquartered firm were down 19% in early trading on Monday morning at 1,609.05 pence each.
For 2019, the the premium tonic water maker expects total revenue of GBP260.5 million, which would represent a 9.7% increase on the GBP237.4 million generated in 2018.
Fevertree, in spite of the "soft" trading, said it continued to invest in the business. As a result, its margins will end 2019 behind expectations. The company expects earnings to fall by about 5% from 2018. Fevertree reported adjusted earnings before interest, tax, depreciation and amortisation of GBP78.6 million in 2018.
Looking forward, the company said it will continue to invest in its business, and is guiding for gross and Ebitda margins of about 49% and 28% in 2020. Fevertree recorded a gross profit margin of 51.8% with an Ebitda margin of 33.1% in 2018
In the UK, revenue is expected to slip 1.1% to GBP132.6 million in 2019 from GBP134.1 million the year before.
"As reported, the wider retail environment in the UK experienced a challenging Christmas with the mixer category not immune from the weak consumer confidence and corresponding slowdown in spending," the company explained.
Fevertree said it remains the "clear" market leader in the UK but did not see an improvement in trading as the "macroeconomic uncertainty" lead to "subdued" trading at the end of the year.
Trading is expected to remain challenging in the first half of 2020 in the UK, Fevertree said.
Elsewhere, revenue in the US is expected to grow 33% to GBP47.6 million, while revenue from European operations should rise 16% to GBP64.4 million. Rest of the World revenue will increase 32% to GBP15.8 million.
"Our key growth markets delivered a strong performance with sales accelerating in the second half in the US and Europe as well as a notable end to the year in Australia and Canada. As we enter 2020, the group is seeing this good momentum continue across multiple regions," Fevertree said.
Chief Executive Tim Warrillow added: "Despite the subdued end to the year in the UK, we have delivered a strong performance across many of our regions in 2019 and begin 2020 with real momentum in a number of key growth markets. Whilst the UK mixer category has clearly not been immune from the consumer belt tightening seen in recent months, we remain the clear category leader and have a strong platform to return to growth during 2020 and beyond."
Fevertree is scheduled to publish its 2019 results on March 24.
By Paul McGowan; [email protected]
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