Shares in listed ingredients group Treatt jumped 3% today to 144.7p as it reported “solid” revenue growth in its first-half compared with a year ago, with profits also up.
The company, which manufactures ingredients for the flavour, fragrance and FMCG industries, said trading had recovered in the second quarter following a “relatively slow” Q1, which reflected the increased seasonality of the business.
Underlying gross margins continued to improve, but were offset in the six months to 31 March by adverse raw material price movements.
Investment firm Investec has held its forecasts following the statement, expecting profit before tax to have risen by about 8% to £3m. Analyst Nicola Mallard interpreted the “solid” growth to mean between 7% and 8% growth in the top line.
“The group reports a solid first half performance, but more importantly is starting to see its strategy deliver,” she said. “Greater intragroup collaboration has resulted in some new business wins in the beverage sector, an area of particular focus. These are part reflected in the stronger Q2 performance, but there should be more revenue benefit to come.”
Treatt added: “The first six months of this financial year have been encouraging with new business wins in a number of key market segments, including the growing craft beer market and in the sugar-reduction wellness arena for soft drinks.
“In addition, active concentration on our partnerships with global customers has enabled us to win added-value citrus and other flavour business across a range of beverage products.”
The Treatt board is also actively considering a number of options with regard to its UK plant and facilities at Bury St Edmunds, which it said no longer met the medium to long-term needs of the business.
It added that formal plans were “some way off”, but expects to be in a position to consult with key stakeholders to gain their support as the proposals come together over the next six to nine months.
Looking ahead, Treatt said its order books were “encouragingly ahead” of the same period last year and it remained on course to meet its expectations for the full financial year ending 30 September 2015.