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Fever-Tree has posted annual growth of 6% despite a stagnation of UK sales as it doubled profits in the second half of 2023.

Announcing a pre-close update for the year to 31 December, Fever-Tree group revenues were up 6% to £364m.

Growth was driven by the US, where sales were up 24% to £117m at constant currency, as the group’s core UK revenues fell back 1% to £114.8m.

However, UK revenue was ahead of guidance reflecting good trading in Q4, particularly in the on-trade. In the off-trade it delivered “notable growth” whilst in the on-trade, despite the continued pressure on the cost of living, the brand ended the year with its strongest-ever value share.

US growth was driven by off-trade, with NIQ recording 24% year-on-year growth fuelled by the strong performance of its new can format across all flavour categories.

The brand had a very encouraging December in the US and continues to perform ahead of the mixer category.

In Europe, Fever-Tree revenues grew at 6% (4% at constant currency) as revenue growth was impacted by subdued consumer sentiment in several markets, most notably in Germany.

Rest of the world sales fell 14% (down 10% at constant currency) as the transition to a new subsidiary set-up in Australia, which included a one-off inventory buy-back in the first half of the year, impacted revenue delivery for the total region.

The group expects to deliver adjusted EBITDA for the full year of £30m, which is at the lower end of previous guidance despite group EBITDA doubling in the second half of the year.

Fever-Tree said the second half saw significant progress in driving operational efficiencies and offsetting material inflationary cost pressures, and will continue to deliver significant margin improvement in 2024.

In terms of sales, it expects to deliver “good” growth in 2024 and reiterated guidance of 10% revenue growth for the Fever-Tree brand.

However, its refocusing of non-Fever-Tree brands in Germany will see a £7m reduction in portfolio brand revenue in 2024. As a result total group revenue is expected to grow by 8%.

It also guided to “significant” improvement in gross margin in 2024, underpinned by new glass contracts with fully hedged energy pricing, lower Trans-Atlantic freight rates, and a continuation of cost-saving initiatives.

Therefore, it reiterated guidance of 15% adjusted EBITDA margin for 2024.

Tim Warrillow, CEO of Fever-Tree, commented: “The Fever-Tree brand has performed well in 2023, growing our market share in all of our key markets, despite a challenging macroeconomic environment. The US ended the year as our largest region, where we have extended our leadership position in both the tonic and ginger beer categories.

“The brand enjoyed a strong Christmas trading period in the UK, especially in the on-trade, whilst at home, our new Espresso Martini mixer clearly became a festive drink of choice. Despite recession in Germany impacting our European performance and the one-off effect of the transition to our new subsidiary in Australia, we remain confident of driving good growth in those regions in 2024.

“Importantly, we have driven a significant increase in our EBITDA margin in the second half of the year, and are confident the operational efficiencies we have implemented, alongside a reduction in inflationary cost pressures, will drive a doubling of EBITDA in 2024 and provide a strong platform for profitable growth going forward.”

Morning update

Food-to-go specialist Greencore saw a reduction of total revenues but a rise in like-for-like sales in its first quarter due to the impact of divestments.

For the 13 weeks to 31 December the group reported revenue decreased by 4.7% to £441.3m.

On a pro forma basis, adjusting for the disposal of Trilby Trading Ltd in Ireland, revenue was broadly flat year on year. On a like for like, revenue increased 5.8% from the same period last year.

Total manufactured volumes for the quarter declined 4.8%, due to the proactive decision to exit a number of contracts that were delivering “sub-optimal returns”.

On a like-for-like basis manufactured volumes were 0.5% higher.

For the four weeks to 24 December 2023, comparable volumes were 5.6% higher year on year, versus an overall market performance of 1.8%.

Reported revenue in food-to-go categories increased 0.9% to £293.7m. On a like-for-like basis this was an increase of 5.8%, with this increase primarily due to a rise in manufactured volumes and inflation recovery initiatives.

Reported revenue in other convenience categories was £147.6m, a 14.2% decrease year on year. However, on a like-for-like basis this represented a 5.9% increase, which was driven by ongoing inflation recovery initiatives. Total volumes in other convenience categories, including exited contracts, declined 7.3% and up by 0.4% on a comparable basis.

The decision to proactively exit several contracts in 2020, including a significant chilled ready meals contract, accounted for approximately a 6% decrease in year-on-year revenue on a pro forma basis.

Greencore said profits in Q1 improved strongly year on year, benefiting from ongoing commercial, operational and cost initiatives with significant focus on innovation and an optimal product mix to unlock value for Greencore.

In Q1, the Group refinanced its debt facilities with a new five-year £350m sustainability-linked revolving credit facility, maturing in November 2028 with the option to extend for up to a further two years.

Greencore said inflationary pressures on raw materials and energy were now easing, providing a more stable cost outlook in 2024 compared to the prior year. However, wage inflation will persist due to national living wage increases, which it will continue to manage through ongoing recovery and mitigating actions.

Following the strong financial and operational start to the year, with improved profit conversion, the group expects to generate a 2024 financial year performance in line with current market expectations.

CEO Dalton Philips said: “I am extremely encouraged by the strong start to the year for our business. Our manufactured like-for-like volume growth of 0.5% in the quarter continued to outperform the market in the key categories in which we operate. This performance has once again been supported by our outstanding operational service levels to ensure availability of products to our customers. Our focus as a team is to provide fresh and healthy foods to our customers and consumers each and every day.

“Our progress as a business has been delivered through continued effective operational and commercial initiatives, as detailed in November. This has supported improved profit conversion and a strong profit outturn in the quarter. We are committed to continuing to drive profitability through commercial discipline and are investing in several initiatives to develop a robust platform for future growth.

“While we remain mindful of the seasonally important second half of the year, we are confident the Group will deliver a full year outturn in line with current market expectations.”

Britvic has posted first quarter performance in line with expectations, with revenue growth being supported by a year-on-year increase in volumes.

In the first quarter, group revenue increased 8.1% to £443.5m on a constant currency basis (reported up 7.9%) and volume was up 1.7% versus last year.

It reported a “robust” quarter for GB, with revenue up 6.9% and both retail and hospitality channels in growth.

It also saw strong growth in Brazil with revenues up 21%, including the benefit of recent acquisitions.

Other international markets revenue was up 6%, led by Ireland which grew 12.5%. Sales in France were up 1.1%, with strong price/mix, offsetting a volume decline.

Britvic also reported strong December trading, with group revenue up 12.1% and volume up 6.4% as it benefited from like-for-like growth and recent acquisitions.

CEO Simon Litherland commented: “We are pleased with such a positive start to the year. Our performance in the first quarter was strong and in line with our expectations, as we continue to offer consumers value as well as great taste, with our portfolio of family favourite soft drinks brands. We have exciting plans for the year ahead across our markets, with new innovations and engaging marketing activations, including Pepsi’s first brand refresh in 14 years.

“More broadly, Britvic is a well-invested business, with a clear growth strategy. We remain confident of achieving growth this year within the range of market expectations, as well as continuing our track record of delivering superior returns longer term.”

Ingredients supplier Treatt has posted a trading update ahead of its AGM later today.

Revenue performance in Q1, which is typically its quietest quarter, saw a decline year on year as anticipated, reflecting the impact of destocking.

However, it said there were encouraging signs destocking trends are reversing, and as such it expects customer demand to return to more normal levels in Q2.

It stated: “We remain committed to volume growth, and are well placed with a healthy pipeline of opportunities with both new and existing customers.

“Many of these opportunities align with the long-term trends towards health & wellness and use of natural extracts, areas in which Treatt has a recognised market position, as well as opportunities in our target growth areas in new markets.

“Whilst we are mindful of ongoing macroeconomic pressures, we are encouraged by current trading, underpinning our confidence in our trading performance for the year ahead.”

On the markets this morning, the FTSE 100 is flat at 7,526.6pts.

Early risers include Kerry Group, up 3.1% to €79.98, Virgin Wines, up 2.3% to 38.9p, and Britvic, up 1.3% to 866p.

Fallers include Nichols, down 3.3% to 1,040p, McBride, down 2.6% to 72.6p, and Fever-Tree, down 2.1% to 991p.

Yesterday in the City

The FTSE 100 ended the day up 0.6% to 7,527.7pts.

Risers yesterday included McBride, up 5.4% to 75.6p, THG, up 4.9% to 67.9p, Greencore, up 4.6% to 102.9p, PayPoint, up 3.2% to 550p, Marks & Spencer, up 2.6% to 255.8p, Just Eat, up 2.5% to 1,239p, and Naked Wines, up 2.3% to 67.5p.

The day’s fallers included Haleon, down 2.5% to 313.4p, Greggs, down 2% to 2,642p, AG Barr, down 1.1% to 534p, Reckitt Benckiser, down 0.7% to 5,514p, Coca-Cola HBC, down 0.6% to 2,313p, and PZ Cussons, down 0.6% to 137.8p.