Shares in Fevertree Drinks (AIM:FEVR) fell 10% to 780p after it reported a smaller profit rebound in the first half of the year than many were hoping for, though overall sales were flat.
A 2% increase in its interim dividend to 5.85p was declared, as a "strong start" has been made to the second half, where the company is optimistic about accelerating growth.
Revenue of £170.6 million was generated in the first six months of 2024, flat on a reported basis, or up 2% if currency swings are ignored.
Sales were up 10% in the US, which became the largest geographic market last year, down 6% in the UK and 10% in Europe, while jumping 57% in the rest of the world.
Underlying profits (EBITDA) rose 79% to £18.2 million, with gross margin expanding to 35.9% from 30.7% a year ago, on the back of a new glass supply contract, improved trans-Atlantic freight rates and higher selling prices.
Profit before tax ballooned to £13.2 million from £1.4 million, with PBT and EBITDA having fallen 24% and 23% respectively last year.
Chief executive Tim Warrilow said sales in Europe and the UK were hit by “unseasonable weather” at the start of summer, but there has been a “much more positive trading performance” in the second half of the year across all regions.
For the growth in profit margins he hailed the company’s “controlling the controllables” in the face of a challenging market.
Warrilow said the company is optimistic of an acceleration of growth across the second half, with guidance given for revenue growth for the full-year of 4-5% for the Fever-Tree brand, with around 600 basis points of gross margin improvement.
Analysts said first half EBITDA was below expectations and noted that guidance for branded revenue growth was reduced from 10% previously.
** Update: Adds detail and share price **