Fevertree H1 profits dented by rising costs

Posh tonics maker Fevertree reported a drop in first-half profit on Tuesday as it was hit by rising costs.

In the six months to 30 June, pre-tax profit slid 30% to £17.6m, while adjusted earnings before interest, tax, depreciation and amortisation were 25% lower at £22m. Revenue rose 14% to £160.9m.

The gross margin declined to 37.4% from 44.1% in the same period a year earlier. Fevertree said inflationary cost increases had impacted underlying product costs and logistics costs across regions.

It noted further increases in the underlying cost of sea freight, with ongoing exposure to Trans-Atlantic freight costs as UK-produced stock is required to underpin US growth until East Coast production increases to required levels.

The company said that while both pricing actions in its established regions and changes in channel and regional mix drove margin improvement, this was not enough to offset the impact of inflationary headwinds in the first half.

Fevertree reiterated guidance for FY revenues of between £355m and £365m and EBITDA of between £37.5m and £45m.

Chief executive Tim Warrillow said: "Fevertree has delivered a robust revenue performance in the first half of 2022, with a particularly strong performance in Europe as the On-Trade recovered. Demand has been strong in the US and we have continued to increase our availability on shelf enabling us to deliver a record month in August, a fantastic achievement by the team.

"Alongside driving topline growth, the business remains extremely focused on mitigating the industry-wide cost impacts and whilst we are still highly mindful of the extreme volatility impacting energy-related and logistics costs, we do expect to see a gradual decrease in our exposure over the medium term."