Fevertree Drinks PLC (LON:FEVR) said it has started to work with a new bottling partner on the West Coast of the US to ramp up production while also upgrading earnings expectations.
The posh mixers producer said operating on the West Coast will cut transport and logistic costs, but it will also significantly reduce lead times, providing greater agility to respond to growing demand in the US market.
The AIM-listed firm also posted a small dip in full-year revenue as a fall in the core market of the UK outweighed growth in its other markets as off-trade and e-commerce channels grew to mitigate the damage of hospitality closures.
As coronavirus restrictions are gradually lifted around the world, Fevertree expects some of the off-trade demand to switch to the on-trade although at-home consumption is expected to hold up.
Fevertree's underlying earnings (EBITDA) are in line with expectations so, coupled with a rise in revenue, it means earnings will come in ahead of forecasts.
Revenue for the year to December 31, 2020 dropped 3% to £252mln, with the UK down 22% to £103mln, the US jumped 23% to £58mln, Europe rose 1% to £65mln and ‘the rest of the world’ surged 58% to £25mln.
Cash at year-end was £143mln.
“This is a strong result by Fevertree in a tough year, and reflects the strength of the brand,” analysts at Liberum said in a note to clients.
“The increased consumer trial and awareness in the US should bode well for the future, and the beginning of local production in the US in December 2020 should provide gross margin tailwinds going forward. The success in the rest of the world is also indicative of the global opportunity ahead of the company.”
Fevertree shares jumped 4% to 2,392p early on Thursday.