TIDMTET
RNS Number : 9761I
Treatt PLC
07 April 2020
7 April 2020
TREATT PLC
("Treatt" or "the Group")
Trading update for the half year ended 31 March 2020
Treatt, the manufacturer and supplier of innovative ingredient
solutions for the beverage, flavour, fragrance and consumer product
industries today publishes a trading update for the half year ended
31 March 2020 (the "Period").
Treatt plays a critical role in the food, beverage and cleaning
supply chains and order intake in recent weeks has been strong as a
number of our customers respond to increased demand for beverages
consumed at home and cleaning products (such as liquid hand soaps
and floor cleaning products) which are of particular importance at
this time.
As such, the Board can confirm that, to date, there has not been
any adverse effect on the trading performance of the Group due to
COVID-19 and the Group is currently trading in line with the
Board's expectations.
The business has taken, and will continue to take, timely action
to protect the health and safety of all its employees across the
Group as well as doing all it can to support the communities in
which it operates. We received early indications of the likely
steps that would follow from our colleagues in Shanghai, where our
office remained open, albeit operating for one month on a staff
rota, and whom we are pleased to say have now all returned to work.
In both the UK and US all non-essential staff are working from home
and manufacturing continues, working within government guidelines
and with appropriate health protection and wellbeing measures in
place.
As previously reported, we expected the sharp fall in citrus raw
material prices in the last financial year to continue to impact
upon revenue in the first half of the current financial year.
Consequently, whilst in-line with expectations, revenue for the
Period is expected to be approximately 5.1% lower as compared with
the same period in the prior year (5.6% lower in constant
currency).
Whilst citrus remains a significant part of the Group's
business, there was good growth in reported revenue from fruit and
vegetables (up 9.4%), tea (up 47.5%) and health and wellness (incl.
sugar reduction) (up 19.9%). The vast majority of Treatt's
portfolio is targeted at the growing demand from consumers for more
natural and clean-label products which is helping to drive our
financial performance as well as our encouraging opportunity
pipeline. Our customers continue to look to product innovation to
differentiate their products, launch new products and categories
and refresh existing products. Treatt continues to benefit from the
valuable role our services play in helping meet these demands with
the Group's new product development programme progressing well with
market entry points currently being explored.
Building work on our new facility in the UK has inevitably
slowed as a consequence of the COVID-19 pandemic. We now expect
that our UK relocation may not take place until 2021 but at this
stage it is not possible to confirm a new definitive timescale. The
delay to our UK relocation will not affect our ability to meet
customer orders in the short to medium term but such a delay does
enable the Group to preserve cash during this period of
uncertainty. At the end of the Period the Group had net cash of
GBP6.5m and total bank facilities of GBP25.0m, of which GBP24.9m
remains undrawn.
As previously reported, the expansion of our US manufacturing
facility was completed last year and is now fully operational. Our
capacity for products in our fast-growing fruit and vegetables,
health and wellness and tea product categories has now doubled and
is coming on stream in time for the new crop season as growth in
these categories continues from both new and existing
customers.
The Group has a hedging strategy in place to try to minimise the
impact of exchange rate movements over the course of a financial
year though there can be material effects over shorter periods of
time. During the Period there was a strengthening in the USD/GBP
exchange rate and, as a result, the Board anticipates a net
positive FX impact on the results for the Period of approximately
GBP0.6m.
Outlook
The focus we have made over recent years on the culture in the
business means that we have an incredibly strong and committed team
of employees who we know will shine in these exceptional times,
whilst protecting the health and safety of each other and the wider
communities in which we operate.
The business is both trading well and is financially robust; we
are encouraged by our order book and current demand as we move into
our peak seasonal period. Also, and as expected, citrus raw
material prices are firming once more, which should result in a
stronger performance from our citrus category in the second half of
the financial year. Whilst it is difficult to determine the likely
impact of COVID-19 on the demand for the Group's products in the
coming months, our early experience has shown demand to be robust
and at this time, trading remains in line with the Board's
expectations.
It is currently expected that Treatt's half year results for the
six months ended 31 March 2020 will be announced on 12 May
2020.
Enquiries:
Treatt plc +44 (0)1284 702500
Daemmon Reeve Chief Executive Officer
Richard Hope Chief Financial Officer
Broker
Investec Investment Banking
Patrick Robb +44 (0)20 7597 5970
David Anderson
Alex Wright
Public relations
DRD Partnership
Lawrence Dore +44 (0)20 3951 0349
About the Group
Treatt is a global, independent supplier of innovative
ingredient solutions for the flavour, fragrance and multinational
consumer product industries, particularly in the beverage sector.
Renowned for its technical expertise and knowledge of ingredients,
their origins and market conditions, Treatt is recognised as a
leader in its field.
The Group employs over 300 staff in Europe, North America,
Africa and Asia and has manufacturing facilities in the UK, USA and
Kenya. Its international footprint enables the Group to deliver
powerful and integrated solutions for the food, beverage and
fragrance industries across the globe.
For further information about the Group, visit www.treatt.com
.
CAUTIONARY STATEMENT ABOUT FORWARD-LOOKING STATEMENTS
This announcement contains forward-looking statements that are
subject to risk factors associated with, among other things, the
economic and business circumstances occurring from time to time in
the countries, sectors and markets in which the Group operates. It
is believed that the expectations reflected in these statements are
reasonable, but they may be affected by a wide range of variables
which could cause actual results to differ materially from those
currently anticipated. No assurances can be given that the
forward-looking statements in this announcement will be realised.
The forward-looking statements reflect the knowledge and
information available at the date of preparation of this
announcement and the Group undertakes no obligation to update these
forward-looking statements. Nothing in this announcement should be
construed as a profit forecast.
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contact rns@lseg.com or visit www.rns.com.
END
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