Fevertree Drinks, which produces the Fever-Tree range of tonics and mixers, cut its annual revenue growth forecast, as unexpected wet weather at the start of its key summer season dampened sales for the British beverage maker.
An unusually cool and wet weather in Britain weighed on spirits and fewer people stepped out at the start of summer, hurting sales and demand for everything from clothes to cocktails.
Weak sales in restaurants and pubs have also contributed to the lacklustre first-half performance, Fevertree Drinks said.
First-Half Revenue
UK revenue was down 6% in the first half, with total group revenue down 2%. The US (up 7%) and Rest of World (56%), performed stronger, however.
Fevertree now expects revenue growth of about 4%-5% for the full year, lower than the 10% initially projected in March.
Analysts, on average, were expecting revenue growth of about 7%, according to a company-compiled consensus.
Tough Market Backdrop
"The Fever-Tree brand performed well against a tough market backdrop," commented Tim Warrillow, chief executive. " We continued to deliver double digit revenue growth in the US at constant currency, as well as a strong performance in our ROW region.
"The first half performance in the UK and Europe was impacted by unseasonable weather at the start of summer alongside distributor order phasing in Europe, but we have seen a strong improvement in these regions as the summer belatedly arrived."
Warrilow added that while the first half of the year was "challenging" for the group, Fevertree is "controlling the controllables. We have delivered substantial margin improvement, resulting in a c.80% increase in EBITDA year-on-year, as well as driving share gains against the competition across all our regions, demonstrating the growing strength of the Fever-Tree brand."
Analyst Viewpoint
Commenting on the group's performance, Anubhav Malhotra, research analyst with Panmure Liberum said, "We think the new guidance implies a 7-10% cut to current consensus EBITDA. Cash position remains strong at £66m and the Group anticipates being able to return surplus cash to shareholders during FY25.
"While near-term concerns around top-line growth continue to weigh on the shares, we remain bullish on the long-term prospects for the brand. Valuation at 23.5x 12m forward P/E and 13.8x EV/EBITDA is not out of kilter and earnings growth should continue to drive the shares."
Additional reporting by ESM
