Fevertree Drinks (AIM:FEVR) reported a 23% fall in profit for 2023 but as inflationary pressures continue to abate, it is confident of doubling earnings this year.
Last year, the US became its largest region for the cocktail mixer maker, with a 22% increase to £117 million offsetting a 1% UK contraction to £114.8 million, as group revenue rose 6% to £364.4 million.
Profit before tax fell 28% to £22.2 million, with underlying earnings (EBITDA) down 23% to £30.5 million, although EBITDA in the second half up doubled versus the first.
The board expects a return to growth in the UK and the rest of the world over the coming year, while double-digit increases are anticipated in the US.
“Taken alongside softening inflationary pressures, the operational efficiencies we are delivering means I am confident that we are entering 2024 in a very strong position from an operational perspective and have an excellent platform for strong profitable growth going forward,” said chief executive Tim Warrilow.
The board remains comfortable with consensus expectations of around 10% growth for the Fever-Tree brand in the year ahead, with guidance reiterated for 600 basis points of gross margin improvement helped by cheaper glass pricing, materially lower trans-Atlantic freight costs and further internal efficiencies.
A 2% dividend increase to 16.64p per share was indicative of confidence.
"Rising energy costs and inflation have hindered the business, in particular, increasing manufacturing costs of their glass bottles, something the company opted to suck up as opposed to passing the costs onto consumers and running the risk of losing market share," eToro analyst Mark Crouch commented.
"News that the business is beginning to flourish in the US is certainly a good sign," he added, though cautioned persistent cost of living pressures may prompt further shifting of spending habits over the coming months.
The shares climbed 0.8% to 1,084.98p.