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Premium drinks mixer producer Fever-Tree saw a double-digit drop in sales and profitability as the shutdown of bars, pubs and restaurants hit first-half trading.

Total revenues over the six months to 30 June were down 11% year on year to £104.2m as sales fell by 20% in its core UK market back to £48.3m.

However, Fever-Tree said this was a “resilient” performance as off-trade sales exceeded expectations across its regions.

It pointed to maintaining its position as number one brand in the UK mixer category at retail and very strong US performance (up 39% to £27.4m) ahead of expectations as the brand continues to gain traction.

Sales fell 29% in Europe, impacted by temporary importer de-stocking during lockdown

Gross profits fell back 20% £48.7m, while adjusted EBITDA was down 35% to £23.8m.

Pre-tax profits fell 37.9% back to £21.7m from £35m in 2019.

Fever-Tree said profit margin was impacted by a Covid-related shift in channel and regional sales mix, and the US price optimisation.

However, it continues to upweight investment in marketing and to support the long-term opportunity across all regions, maintaining previously budgeted underlying operating costs of £60m for the full year.

The company stated that it remains confident that continuing to invest in people and its brand will position it strongly as the world emerges from the current period of uncertainty.

CEO Tim Warrillow commented: “Our priority throughout the Covid-19 pandemic has been our close-knit team, who are integral to the success of the business. We did not furlough any team members and instead focused on redeploying talent around the business. We have also continued to invest in building the team across the globe, adding 20 new employees in the first half of the year.

“Our performance in the off-trade over the first half of the year has been very encouraging with sales across our regions exceeding our expectations. People’s interest and excitement about mixing drinks at home has really taken hold over the lockdown period, attracting more households to the Fever-Tree brand than ever before. Consequently, we have increased our penetration in the UK, consolidated our number one position, and driven value share gains in the US, Europe, and as far afield as Canada and Australia.

“We have had an encouraging start to the second half of the year and, while we certainly aren’t immune to the ongoing challenges of Covid-19, our performance and our investments so far this year, coupled with the growing interest in long mixed drinks, gives me confidence that we will exit the crisis in an even stronger position than we entered it.”

Fever-Tree said that, given the level of uncertainty and the dynamic nature of the situation, the impact of Covid-19 on the remainder of the financial year was still hard to predict.

However, on the assumption of no further significant lockdowns in our regions as seen in the second quarter this year, and a continued gradual recovery of the on-trade, it expects full year revenues of between £235m and £243m.

Fever-Tree shares have slumped 8% to 1,951.2p in response to this morning’s figures.

Morning update

The BRC-KPMG retail sales monitor for August, showed a further decline in like for like retail sales of 4.7% year on year.

However, on a total basis, sales increased by 3.9% in August, which is the best growth since May 2018, excluding Easter distortions.

Over the three months to August, in-store sales of non-food items declined 17.8% on a total and 8.5% on a like-for-like basis.

While over the same period food sales increased 6.3% on a like-for-like basis and 5.9% on a total basis.

Non-food retail sales increased by 7.7% on a like-for-like basis and 1.4% on a total basis over the same three month period.

BRC chief exec Helen Dickinson commented: “Despite another month of growth in August, retail sales remain down overall since the start of the pandemic.

“Lockdown appears to have permanently changed some consumers’ shopping habits, with online sales continuing to boom despite shops reopening in June. Meanwhile, city centre retailers continue to be devastated by low footfall and poor sales, as office workers stayed away for yet another month.

“Many retailers are continuing to struggle, particularly those in clothing, footwear and beauty, that are reliant on high footfall locations. Unless businesses and government can successfully persuade office workers back into city and town centres, some high street retailers will be unable to afford their fixed costs. Government will need to act fast or September will see more shops close and more job losses realised.”

Paul Martin, UK head of retail at KPMG, added: “The retail sector continued to show promising signs of recovery in August, with like-for-like retail sales up 4.7% compared to last year. Whilst welcome news, the coming months are far from problem free, with economic uncertainties – including the unwinding of the furlough scheme – likely to leave many consumers thinking carefully about their spending priorities.

IGD CEO Susan Barratt added: “Following further easing of lockdown restrictions, consumer spending on food continues to return to more usual patterns. Grocery sales put in a solid performance compared to August 2019, despite a much cooler summer bank holiday at the end of the month for English and Welsh shoppers. The ongoing normalisation of consumer spending has also been helped by the government’s Eat Out to Help Out scheme, which gave the out-of-home sector a significant and much-needed boost.

“The Eat Out to Help Out scheme and the holiday season helped IGD’s Shopper Confidence Index remain stable. However, shoppers have varying experiences and confidence is more subdued among lower socio-economic groups and younger shoppers (aged 18-34), with these consumers traditionally impacted more during an economic downturn.”

Elsewhere, new figures from Barclaycard suggested that consumer spending grew 0.2% year on year in August – the first uplift since February 2020 – as Brits enjoyed the last of summer by socialising and holidaying in the UK.

Spending on essentials grew 5.1%, with the number of fuel transactions returning to similar levels seen last year, as Brits embarked on staycations and started returning to workplaces

Clothing spend saw growth for the first time since March 2019, as shoppers took advantage of end-of-season sales

Lockdown has also increased the shift towards online when it comes to food purchases, with takeaways and fast food seeing their highest increase (20.7%) since tracking began in September 2019

Spending at pubs and bars has also recovered, with 9.3% growth in transactions – the first uplift since lockdown began, as punters socialised with friends and family

However, confidence in the UK economy fell to 19%, yet household confidence remained steady as holidaymakers postponed trips abroad and put the money into savings instead

On the markets this morning, ready meals maker and fresh foods producer Bakkavor saw a 4.6% drop in first half revenues as Covid-19 had a “significant impact” on performance.

Bakkavor’s overall revenues in the first six months of 2020 fell 4.6% to £880.5m with like for like revenues down 5.2% compared with the same period last year.

It said that the coronavirus outbreak had a significant impact on its overall performance during this period, with its business in China severely impacted towards the end of January, and its UK and US businesses experiencing a sharp reduction in sales volumes in the last week of March and into April.

This situation improved into May and June as volumes in all three regions started to stabilise and show early signs of recovery. However, markets remain volatile and consumer habits continue to adjust.

Adjusted operating profit was impacted by lower sales volume in the period and fell 32.3% to £28.7m.

Pre-tax profits were down 65.1% to £6.8m as it took measures to protect the bottom line, including a substantial cut in capital expenditure to £21m and a focus on essential maintenance projects.

However, Bakkavor said it had seen a steady recovery in trading across the business in June, which has been maintained into the second half of the year.

It said the macroeconomic uncertainty caused by Covid-19, combined with limited clarity as to the terms and implications of the UK’s exit from the EU, means that it maintains a cautious outlook for the rest of this year and into 2021.

“However, our performance in the first half of the year has proven our ability to withstand major operational challenges and gives us confidence in the quality of our business model and strength of our customer partnerships,” it stated.

CEO Agust Gudmun commented: “The first half of this year has been extremely challenging, but I am pleased to report that the group has produced a solid performance given the Covid-19 issues the business has faced. The scale and strength of our operations, coupled with our ability to react at speed, has proved a clear advantage to our customers during this period.

“But more than this, our performance is testament to the hard work and commitment of everyone at Bakkavor. In difficult circumstances, we have worked tirelessly to minimise disruption and continue to deliver for our customers. We are fortunate to have such dedicated colleagues and their health, safety and wellbeing continues to be our foremost priority. I am hugely grateful for their support.

“We have taken many difficult yet necessary decisions this year to protect the long-term success of our business. Whilst there will be further challenges ahead, we remain a robust, balanced and well capitalised group and the steps we have already taken to protect our business, combined with the recent improvement in trading, gives us confidence for the future.”

Household goods manufacturer McBride has posted a 2.1% drop in full year group revenues to £706.2m, 2.1% lower (1.7% at constant currency), mostly from its exit of its aerosols business in the UK.

Its full year Household revenues at constant currency were broadly flat compared to the prior year. This performance was driven by significant year‑on‑year growth in its South region and Asia, offsetting continued challenges in the French market and a weak performance in the UK.

Its first half year proved “challenging”, particularly due to weaker second quarter revenues across most European markets. However, its second half year saw significant volume recovery in the last four months as a result of strong demand for cleaning products due to Covid-19.

Consequently second half adjusted operating profits were £16.7m generating a margin of 4.7%, which contrasts with £11.6m and a margin of 3.3% in the first half.

Full-year adjusted operating profit of £28.3m was slightly lower than the prior year with adjusted operating profit margin unchanged at 4.0%.

CEO Chris Smith said: “The Group has delivered a solid FY20 performance overall. Following a tough first half year, demand for many of our cleaning products rose strongly as a result of Covid-19. I am very proud of the way the McBride team has responded to the numerous challenges and opportunities that have arisen from the pandemic and the improved second half financial performance.

“Today McBride is announcing the initial findings of a thorough business review and the initial phase of its new “Compass” strategy that targets annual revenues of €1bn over the next five years. From January 2021, we will establish separately managed divisions, each with their own focused strategies, and I am confident that the new McBride teams will deliver on our new ambitions.”

It said detailed divisional strategies to be outlined at investor day in February 2021

FTSE 100 packaging giant DS Smith has issued a trading update ahead of its AGM this morning for the period since 1 May 2020.

It said the business has progressed well in the period with performance continuing in line with our expectations, despite the macro-economic challenges that resulted from Covid-19.

Like for like corrugated box volume performance has improved over the period since the initial impact of Covid-19 and in August it has seen a return to positive growth against August 2019. Its FMCG and e-commerce business has grown through the period demonstrating a consistently strong performance with multinational customers, more than offsetting the continuing challenging conditions in a number of industrial categories.

It also said it is encouraged by the progress in North America, in particular in attracting new customers, including multinationals, to its Indiana plant.

Supply chains have remained robust which has allowed all its plants to remain operational. Additionally, its strong commercial offering continues to help mitigate the ongoing lower pricing environment.

Given the performance over the last quarter, and our improved clarity in the outlook, combined with a strong financial position the board intends to declare an interim dividend for the half year to 31 October 2020.

CEO Miles Roberts commented: “The underlying drivers of demand for corrugated packaging remain strong and our sustainable packaging solutions for resilient FMCG and e-commerce customers are more relevant than ever.

“While the macro-economic outlook remains challenging, we are pleased to see volume growth in August and the reduced OCC costs. Our customer focus, strong cost control, cash generation, and liquidity profile, together with continued performance in line with our expectations, gives us confidence for the future.”

Ocado has announced that Michael Sherman, chief strategy and transformation officer of BT Group, has been appointed as an Independent non-exec director with effect from 5 October 2020.

Lord Rose, chairman of Ocado, said: “I am delighted to welcome Michael to our Board. Michael has extensive experience and skills in the technology sector and I am confident his insight and expertise will be an invaluable asset to the Board and our continued growth and development as a technology-led software and robotics platform business. We are very much looking forward to working with him.”

Applegreen has announced this morning it is part of an Empire State Thruway Partners consortium which has been awarded and signed a conditional 33 year lease for the design, construction, financing, operation and maintenance of the 27 motorway service areas on the New York State Thruway.

The award is subject to successful completion of a financial plan by the consortium members, securing funding and the subsequent approval of the financial plan by the New York State authorities

The sites are located on the New York State Thruway which is a 570-mile superhighway system crossing the state, running from the outskirts of New York City north to the state capital, Albany and continuing on to Buffalo in the west of the State. The Thruway handles approximately 250 million trips annually, and accounts for an estimated 8bn miles of travel each year.

The consortium will invest $300m between 2021 and 2025 in redevelopment capital expenditure which will be comprised of a mix of equity and project finance debt to be obtained by the consortium.

Applegreen will operate all 84 food and beverage outlets and a retail store on each site. Applegreen is expected to have a minority shareholding in the consortium and its equity contribution for the transaction is still to be determined and will be agreed as part of completing the consortium’s financial plan.

The FTSE 100 has started the day up 0.3% to 5,955.6pts solidifying its gains from yesterday.

Major risers so far this morning include DS Smith, up 5.7% to 288.4p, Applegreen, up 3.2% to 325p, Nichols, up 3% to 1,292p and C&C Group, up 2.4% to 210p.

Fallers include FeverTree, down 8% to 1,951.2p, WH Smith, down 2.9% to 1,220p and Bakkavor, down 2.7% to 54p.

Yesterday in the City

The FTSE 100 jumped 2.4% to 5,937.4pts yesterday to rebound strongly after falls at the end of last week.

Bakkavor and McBride were both up ahead of this morning’s trading updates, with the former up 8.8% to 55.5p and McBride up 8.4% to 65.8p.

Just Eat jumped 4.6% to 8,254p while other risers were focussed on out of home consumption, including SSP Group, up 4.4% to 272p, FeverTree, up 3.1% to 2,120p, Greggs, up 2.7% to 1,395p and WH Smith, up 2.6% to 1,257p.

Other risers included DS Smith, up 2.5% to 272.9p, Pets at Home, up 2.4% to 286.4p, Domino’s Pizza group, up 2.4% to 347.8p and Ocado Group, up 2.3% to 2,344p.

Fallers yesterday included McColl’s Retail Group, down 2.6% to 26.1p, Premier Foods, down 1.6% to 81p, Science in Sport, down 1.6% to 31.5p and AG Barr, down 0.9% to 388p.