Treatt ends year on upbeat note despite profit slide

29th Nov 2022 11:59

(Sharecast News) - Treatt reported full-year numbers at the top end of expectations on Tuesday, despite a "disappointing" performance in its hard tea business.

The ingredients and natural extracts specialist, which serves the beverage, flavour and fragrance industries, said revenues in the year to 30 September were £140.2m, up 13% year-on-year or 9% on a constant currency basis.

Pre-tax profit before exceptional items fell 27% to £15.3m, at the top end of the board's revised expectations.

In August, Treatt warned that annual profits would come in between £15m and £15.3m, down from previous guidance of £21.7m, because of deteriorating consumer confidence in the US as well as higher costs.

Treatt said on Tuesday it had seen annual sales growth across all product categories with the exception of a "disappointing" performance in hard tea. "In the first half of 2021, we were involved in a large and very profitably hard tea product launch that did not repeat to anywhere near the level we had anticipated....[and] its subsequent lack of success had a disproportionate effect on our margins."

Hard tea is a canned, ready-to-drink beverage, often mixed with alcohol.

Daemmon Reeve, chief executive, said: "It has been a mixed year for the business, with a very encouraging sales performance across all product categories except hard tea, and significant progress building our infrastructure for future growth.

"We announced some short-term profitability headwinds in August, but have finished the year in line with revised guidance.

"In the face of macro challenges, there is a wave of positive change across the business."

Charles Hall, analyst at Peel Hunt, said: "The full-year results were at the top end of the board's revised expectations. After a tough year, the company looks as though it is back on track with numerous growth opportunities."

Peel Hunt has a 'buy' rating on the stock and a target price of 800p. As at 1145 GMT, shares in Treatt were ahead 3% at 683p.