viewFevertree Drinks PLC

Sparkling Christmas for Fever-Tree Drinks

We are used to CEOs expressing "delight" at the most mundane things, but in Tim Warrillow's case, the emotion is justified

Fever-Tree mixers
It was a neat update from the high-priced drinks mixer maker

Broker forecast upgrades are on the way after up-market mixer drinks company Fever-Tree Drinks PLC (LON:FEVR) issued a strong trading statement.

Sales in the final two months of the year, particularly in the UK, were stronger than anticipated and therefore the board expects that the outcome for the full year will be materially ahead of its expectations.

The group said free cash flow generation had remained strong, and year-end net cash, once all the pennies and pounds have been totted up, should also be ahead of expectations.

UK sales for 2016 were up some 118% year-on-year, helped by a strong Christmas trading performance.

Sales in continental Europe did well in the second half of the year, and the figure for the whole of 2016 should be around 39% ahead of 2015, while in the US sales are expected to up by about 55% year-on-year.

Sales in the rest of the world saw an acceleration in growth in the second half of the year, and full-year sales are expected to be 88% higher than in the previous year.

"We are delighted with our performance in 2016,” said Tim Warrillow, co-founder and chief executive of Fever-Tree.

“Fever-Tree continues to gain market share in both the on and off trade and while we have experienced strong growth across all regions, our performance in the UK has been particularly notable culminating in a very strong Christmas period,” he revealed.

“Fever-Tree continues to pioneer and lead the premium mixer category.  We believe the global opportunity remains in its early stages and will continue to be supported by the long term premiumisation of the spirits sector as well as the growing movement towards mixed and long drinks.  As a result, the board remain confident of the future outlook for the business," Warrillow concluded.

Shore Capital markets had forecast sales of £94mln for 2016, and by Fever-Tree’s measure that figure is about £8.2mln short.

“Prior to today’s update, we were forecasting PBT [profit before tax] of £31.6mln and EPS [earnings per share] of 22.3p. Ahead of talking to management, we would anticipate increasing PBT to c£36m (EPS: c25.4p) being a c14% increase,” said Shore’s Phil Carroll, who has a ‘buy’ recommendation on the shares.

Shares in Fever-Tree rose to 1,217p on the announcement from 1,135p overnight, before subsiding – as fizzy drinks are wont to do – to 1,201p, up 5.8% on the day.

Quick facts: Fevertree Drinks PLC

Price: 2090 GBX

Market: AIM
Market Cap: £2.43 billion

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