Fevertree Drinks (AIM:FEVR), the premium tonic producer, lowered its profit and revenue guidance for the second half of the financial year on Tuesday, citing poor weather and inflationary pressures as the key headwinds denting performances.
Unseasonably poor weather in the UK and an upcoming inventory buyback in Australia mean the group dropped its full-year revenue guidance to between £380 million and £390 million, which represents between 10% to 13% year-on-year revenue growth.
Having previously predicted underlying profits to fall between £36 million and £42 million, the London-listed firm said inflationary cost challenges caused management to lower this figure to £30 million to £36 million.
Going forward into the next financial year, strong revenue and profit growth are forecast, with the group’s underlying profit margin expected to be 15%, ahead of market consensus.
“With normalized freight costs, localised US production, lower energy prices and more visibility on glass supply, a number of tailwinds are developing as the group goes into 2024,” an analyst at Liberum said.
Confidence in the long-term was reiterated by the board recommending an interim dividend of 5.74p per share, representing a 2% annual increase.
Tim Warrillow, chief executive officer of Fever-Tree, said in a company update: “In the UK, despite the challenging macro-economic conditions, we ended the first half with our highest ever value share of 45%, which is over 50% higher than our nearest competitor.
“I have been hugely encouraged by the response to our new innovation, specifically our range of cocktail mixers and adult soft drinks, as shown by the significant and growing listings across both channels.”
Sales for the first half grew by 9% to £175.6 million, driven by a 40% jump in US revenues, while adjusted profits were cut by more than half from £22 million to £10.2 million.
Liberum rates the stock a hold and targets the stock to reach 1,500p, with the group having opened trading at around 1,300p on Tuesday, down around 1.4%.