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Fevertree Drinks warns on profits, more costs lie ahead

Christmas was challenging with the UK described as subdued

Fevertree Drinks PLC - Fevertree Drinks warns on profits, more costs lie ahead

Fevertree Drinks PLC (LON:FEVR) warned results for 2019 will be lower than expectations due to softer trading across its markets with the UK especially weak.

Full-year sales rose 9.7% to £260.5mln (£237.4mln) compared to an earlier forecast of 12-13% growth.

Backing the brand has also affected margins, which will mean earnings for the year to 31 December coming in 5% lower than 2018.

READ: Fevertree's international expansion still palatable despite profit warning

Christmas was challenging with the UK described as subdued and revenue here dropped slightly over the full year.

International progress was healthier but the US, where analysts see a gap for upscale mixers, will see lower revenue growth in the new financial year as Fevertree invests to build market share.

US growth will slow to low double digits in 2020 from 33% in 2019.

Cash at the end of the period remains healthy at £128mln.

Analysts at Liberum placed the stock under review from a 'buy' recommendation waiting for more clarity on the US story.

"We already modelled stepped up investment for the US market but we did not expect this stepped-up marketing expense to coincide with low double-digit growth," they commented.

Shares tanked 22% to 1,562.7p on Monday morning.

--Adds analysts' comment, shares--

Quick facts: Fevertree Drinks PLC

Price: 1262 GBX

AIM:FEVR
Market: AIM
Market Cap: £1.47 billion
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