The half-year performance from mixers maker Fevertree Drinks PLC (LON:FEVR) was mixed, with strong sales growth but narrowing margins.
Global revenue in the first half of 2021 was up 39% to £141.8mln on a constant currency (CC) basis from £104.2mln in the same period of 2020.
Growth in the home market – the UK – looks like it might be losing some fizz, with half-year revenues just 4% higher at £50.3mln but the US, Europe and the rest of the world (RoW) more than picked up the slack.
US revenues on a CC basis were up 42%; Europe’s revenues rose 104% and the RoW saw 71% growth.
As a result of the strong revenue performance, the group has increased its full-year revenue guidance range to £295mln - £304mln.
Gross margin in the first half of the year was affected by significantly elevated costs resulting from the disruption currently disrupting global logistics. As a result, Fevertree anticipates first-half gross margins for the Fever-Tree brand of around 45%, down from 46.2% in 2020, and roughly.44% inclusive of revenue from the portfolio brands of GDP, the German distributor it acquired a year ago.
The drinks company said spending on overheads in the first half of the year was in line with expectations and as a result, the EBITDA (underlying earnings) margin is expected to be around 20.5%, down from 22.6% in 2020 and 29.6% in 2019.
Fevertree said it anticipates “some margin improvement” next year but believes logistic cost headwinds will continue alongside input cost increases on raw materials and production costs.
The group believes the investments made in the business during 2020 have started to pay dividends as its markets continue to reopen.
Over the last year, it has gained market share across the regions in which it operates and declared itself ready to benefit from pent-up demand in the On-Trade (i.e. pubs, bars, clubs, etc.).
"Fever-Tree has made significant progress in the first half of 2021, delivering a strong revenue performance. The last 18 months have highlighted the strength of the Fever-Tree brand amongst our consumers and customers as well as the fantastic team and partners we have in place. We continued to invest in the opportunity during the pandemic and have already started to see the benefits of our long-term outlook as the world has started to reopen,” said Tim Warrillow, the chief executive officer of Fevertree.
“Our performance in the On-Trade as it has reopened has been encouraging in all our markets and our performance in the Off-Trade has also remained strong, with sales far exceeding pre-COVID levels in the UK, US, across Europe, and the Rest of the World.
“Our margins have been notably impacted by global logistics disruption. Despite this, we remain confident as ever in the strength of our business model and the opportunity to improve margins as we cycle out of the current period of COVID disruption,” he added.
Shares in Fevertree were down 5.4% at 2,317p in early deals.