Fever-Tree downgrades FY profit guidance, shares tumble

15th Jul 2022 07:21

(Sharecast News) - Fever-Tree shares tumbled on Friday as the tonic maker downgraded its full-year profit guidance amid higher costs and highlighted an "exceptionally challenging" environment.

The group said the impact of logistics and cost headwinds has significantly worsened in recent months, and it now expects gross margins of around 37% and an EBITDA margin of circa 14% for the first half.

This is expected to continue to impact the business in the second half, meaning the company now expects earnings before interest, tax, depreciation and amortisation of between £37.5m and £45m for the year, down from previous guidance of £63m to £66m.

In an update for the six months to 30 June, Fever-Tree said total revenue rose 14% to £160.9m. UK revenue was ahead 6% at £53.5, with the On-Trade segment impacted by the Omicron variant at the start of the period, before momentum built as the half progressed.

In the US, meanwhile, revenues were up 11% at £40.1m. The company said demand remains "very strong" and that the increase in revenue was "encouraging against the challenging backdrop of port congestion and labour shortages".

European sales rose 27% to £52.4m. Fever-Tree said this was a "very strong" performance given the comparators from the prior year, supported by the return of the On-Trade and driven mainly by its key Southern European markets.

Chief executive Tim Warrillow said: "Fever-Tree has delivered a solid revenue performance in the first half of 2022, with a particularly strong performance in Europe and demand continuing to build in the US. Whilst we are seeing positive top line performance and expect to deliver good revenue growth for the full year, the challenging logistical and cost headwinds we highlighted previously have significantly worsened in recent months and we now expect them to notably impact our full year margins.

"The business is working on a large number of initiatives, and more closely than ever with suppliers throughout our supply chain, to mitigate the transitory headwinds and at the same time ensure we can satisfy the strong demand we are seeing in our growth regions."

At 0810 BST, the shares were down 29.5% at 845.50p.