Fever-Tree became a victim of its own success this week as shares lost some sparkle on Tuesday despite reporting another year of stellar growth, especially in the UK.
The stock plunged 7% in early trading after CEO Tim Warrillow merely flagged an “encouraging” start to 2017 rather than the more bullish growth forecasts the City has grown accustomed to from the premium mixer brand.
News that co-founder Charles Rolls was to shift from executive deputy chairman to a non-exec position added to the skittish reaction from investors - along with slower growth in Europe (24%) and the US (36%). Shares recovered by close of play to finish 25p - or 1.7% - higher at 1,491p, but are still down more than 6% for the week.
A 73% jump in sales to £102.2m and 97% rise in adjusted earnings to £35.8m is nothing to be sniffed at, but its punchy share price is based on Fever-Tree achieving massive growth every year.
“Management points to an encouraging start to the year, which in terms of tone may be a slight disappointment to some investors but given the sheer momentum in Q4 we see it more as a typically prudent approach to managing expectations,” Shore Capital analyst Phil Carroll said.
Investors took little cheer from Finsbury Food Group teaming up with baking icon Mary Berry (see left) as shares sank 2.4% on Monday to 110.3p. CEO John Duffy warned that soaring butter prices, coupled with the weaker pound and growing labour costs, was hampering growth as sales in the six months to 31 December came in flat at £156.6m. The stock is down 6% for the week.
“After worrying recent updates from some of its peers, we sense a measured confidence about Finsbury’s ability to recover these cost increases, albeit we are fully cognisant this still remains very much work in progress,” said Peter Smedley at Panmure Gordon. “Finsbury has shown itself both well-prepared and well-equipped to offset considerable input cost pressures and maintain its progress on multiple levels.”