Fever-Tree profit more than doubles, revenue surges on strong UK performance

Drink mixers maker Fever-Tree reported a surge in profit and revenue for the year to the end of December thanks to strong sales growth across all its regions and channels.

Pre-tax profit rose to £34.3m from £16.8m on revenue of £102.2m, up 73% from 2015. Fever-Tree noted high rates of growth across all regions, flavours and formats, with a particularly notable performance in the UK, where revenue was up 118% against strong comparators from 2016.

Growth was underpinned by improving margins which were helped by favourable currency movements, with adjusted earnings before interest, taxes, depreciation and amortisation increasing to £35.8m from £18.2m the year before.

The board recommended a final dividend of 4.71p per share, bringing the total dividend for the year to 6.25p, up from 3.08p in 2015.

Also on Tuesday, the company said Charles Rolls has announced his intention to transition from executive deputy chairman to become non-executive deputy chairman to the company at the AGM in May.

Chief executive Tim Warrillow said: "2016 has been another exceptional year of growth for Fever-Tree, with strong results achieved across all regions, channels and flavours, emphasising the global appeal of the Fever-Tree brand. As the pioneer and market leader of the premium mixer category, in both market share and reputation, our quality, award winning range of products continues to help drive the momentum towards premiumisation and simple long drink mixability that is transforming both the spirits and mixer categories worldwide.

"As co-founder of Fever-Tree, Charles' support and advice will continue to be invaluable to the company. We have an excellent and growing team in place and I personally look forward to continuing to work with Charles as we further build on the success of the brand that we created together 14 years ago."

Fever-tree said it has made an encouraging start to the year and remains confident that it is increasingly well-positioned to deliver further growth across the business.

At 0820 GMT, the shares were down 5.5% to 1,381.50p.

Neil Wilson, senior market analyst at ETX Capital, said: “Fever-Tree shares lost some of their sparkle despite profits fizzing.

"Shares in the firm have risen by about eight-and-a-half times since listing in 2014, so perhaps it was due a slight correction. Profits need to be taken at some point and investors may judge that the company has reached its zenith, at least in terms of volume and profits growth. If you bought back in Nov 2014 you can fill your boots. Trading at more than 100 times earnings, this is not a cheap stock – the exceptional growth has to be maintained to continue justifying the lofty valuation. Trading was in line but investors have gotten used to earnings beats so maybe a touch of disappointment there was nothing else."

He also highlighted the fact that momentum is coming from the UK market, adding that maintaining this will be exceptionally tough as this market may soften going forward into 2017 as there are signs of a slowdown in consumer discretionary spending.

Meanwhile, Investec said the results revealed a strong year, as expected. However, it assumes a lower margin in full-year 2017 versus FY16, reflecting some prudence around costs, mix and FX and a more normal level of opex expenses.