20th Jul 2021 09:58
(Alliance News) - Fevertree Drinks PLC on Tuesday increased its revenue guidance for 2021, but warned that rising logistics costs are cutting the group's profit margins.
Shares in Fevertree were down 6.6% at 2,288.00 pence each in London on Tuesday morning.
London-based Fevertree is a supplier of premium carbonated mixers.
Revenue in the six months that ended June 30 was GBP141.8 million, a rise of 36% year-on-year from GBP104.2 million.
Revenue growth was driven by the US, up 32% to GBP36.2 million from GBP27.4 million.
UK business was less sparkly, with revenue up 4.1% to GBP50.3 million from GBP48.3 million a year before.
Revenue growth was 39% on a constant currency basis, and this exceeded the board's expectations, Fevertree said.
Restrictions and closures in the On-Trade business - meaning via pubs, bars and restaurants - due to the pandemic are subsiding, Fever-Tree said, adding it has maintained strong relationships with partners in that channel.
However, as the On-Trade reopens, Off-Trade business via supermarkets and other retailers continues to be driven by the popularity of making long-mixed drinks at home, as well as by increased support from retailer and spirit partners, the company said.
Due to the strong start to the year, Fevertree raised its annual revenue guidance to between GBP295 million and GBP304 million. Revenue was GBP252.1 million in 2020, down from GBP260.5 million in 2019.
However, challenges surrounding global logistics cost pressures have progressively impacted the group's margins.
However, gross margin in the half was "impacted by significantly elevated costs resulting from the disruption currently impacting global logistics". As a result, the company expects first-half gross margins for the Fevertree brand of around 45% and around 44% inclusive of revenue from GDP's portfolio brands.
Fevertree bought German distributor Global Drinks Partnership a year ago.
"However, as is being seen in other sectors, growing challenges from COVID-related logistics disruption and associated costs is putting pressure on the group's margins. Consequently, we anticipate gross margins of about 44% for FY21, or 43% inclusive of revenue from GDP's portfolio brands, delivering an Ebitda margin of about 20%," the company said.
For 2020, the AIM-listed stock reported a gross margin of 46.2% and an adjusted earnings before interest, tax, depreciation and amortisation margin of 22.6%.
While the next year should see some margin improvement, Fevertree expects logistic cost headwinds to persist, alongside input cost increases for raw materials and product costs.
By Amrit Sahota; [email protected]
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