TIDMTET
RNS Number : 0398V
Treatt PLC
12 April 2021
12 April 2021
TREATT PLC
("Treatt" or "the Group")
Half Year Trading Update
Momentum continues with strong growth in revenue and margins
Treatt, the manufacturer and supplier of a diverse and
sustainable portfolio of natural extracts and ingredients for the
beverage, flavour and fragrance industries, today publishes a
trading update for the half year ended 31 March 2021 (the
"Period").
Highlights
-- Strong performance across all categories with revenue
expected to grow by 14% to approximately GBP60.8m (H1 2020:
GBP53.6m).
-- Growth particularly strong in tea, health & wellness and
fruit & vegetables categories meeting growing global consumer
demand for healthier living.
-- Gross margin improvements reflect the growth of the above
categories and the transition into more sophisticated,
solution-driven products in citrus.
-- New, state-of-the-art, UK headquarters opening April 2021
with colleagues beginning to transition on a phased basis, which,
along with the recently expanded US facility, ensures the Group is
well-positioned for future growth.
-- Trading in line with the Board's revised expectations as announced in January 2021.
Trading performance
Following the trading update announced in January 2021, the
Board is pleased to confirm that momentum has continued across the
business. Expected revenue growth for the half year of 14% (16% in
constant currency) has been driven by the Group's fast-growing and
higher margin categories of tea, health & wellness and fruit
& vegetables. These categories in particular meet the growing
demand from consumers for more natural, clean-label and
'better-for-you' beverages and are driving pipeline growth and, in
turn, our financial performance.
During the Period the Group has won significant new business
across a wide range of beverage and flavour applications including
the fast-growing alcoholic seltzer market which continues to expand
rapidly in the US and begins to gain traction globally. Revenue
growth has been achieved through direct sales to global and local
brand owners as well as indirectly through the flavour and
fragrance industry, demonstrating the strength of the Group's
business model.
Citrus revenue has returned to modest growth, following a
decline in FY20, and margins improved materially in the Period as
the Group's prior investment in more sophisticated extraction
technologies resulted in the launch of more value-add ingredients.
In addition, raw material prices for orange oil, which fell
significantly in 2019, have returned to more normalised levels.
The Group continues to grow its synthetic aroma business. This
category, which includes important flavour ingredients for meat
alternative protein flavours and snack foods, performed well with
revenue up significantly compared with the prior year. Herbs,
spices & florals, which include an extensive range of
manufactured and traded essential oils and extracts, saw revenues
fall in the Period due to reduced demand caused by Covid-19.
Work on our new UK facility continues apace and we are now a
significant way through the operational fit out. We will begin
transitioning colleagues across in late April 2021 and will start
the commissioning of the new plant and machinery later this
calendar year as planned, to enable production to relocate. We
believe this site, along with our recently expanded US facility,
will provide Treatt with a much stronger platform to support its
growth ambitions.
With the UK relocation nearing completion, net debt at the end
of the Period was GBP5.1m with total bank facilities of GBP21.2m
remaining undrawn.
Whilst the Group's hedging strategy is intended to mitigate the
impact of exchange rate movements, there can be material effects in
the short term. During the Period there was a strengthening of
Sterling against the US Dollar and, as a result, the Board
anticipates a net positive FX impact on the results for the Period
of approximately GBP0.4m.
Outlook
As reported in our January 2021 trading update, the financial
year began strongly in terms of both revenue and margins; this
momentum has continued throughout H1, with trading in line with the
Board's revised expectations. April 2021 is on track to be another
strong month for the Group and performance in the second half
should be bolstered by increased demand for the Group's diverse
range of natural extracts as hospitality venues, including sports
stadia, gradually open.
It is currently expected that Treatt's half year results for the
six months ended 31 March 2021 will be announced on 11 May 2021,
when a further update will be provided based on performance to 30
April 2021 and the outlook for the rest of the year.
Daemmon Reeve, CEO, commented:
" Performance across the Group continues to be very strong
despite the ongoing global Covid-19 related restrictions. These
measures continue to impact our customers in global hospitality
industries and whilst the outlook is promising, we are taking a
conservative approach and will assess how our order book progresses
in the coming weeks and months. The success we have had in
diversifying the Group's flavour and fragrance expertise across a
wide range of categories has helped our resilience over the
Period.
Our strategy is driven by an obsession with offering solutions
that are of clear relevance to our customer base, providing
differentiated ingredients that align with consumer trends in
growing markets. Our effectiveness in developing these
relationships continues to shine through and the execution is
testament to the skill and endeavour of our colleagues together
with the culture across the Group ."
Enquiries:
Treatt plc +44 (0)1284 702500
Daemmon Reeve Chief Executive Officer
Richard Hope Chief Financial Officer
Joint Brokers
Investec Bank Plc +44 (0)20 7597 5970
Patrick Robb
David Anderson
Alex Wright
Peel Hunt LLP +44 (0) 20 7418 8900
George Sellar
Andrew Clark
Will Bell
Financial PR
MHP Communications +44 (0) 20 3128 8789
Tim Rowntree
Simon Hockridge
Catherine Chapman
About the Group
Treatt is a global, independent manufacturer and supplier of a
diverse and sustainable portfolio of natural extracts and
ingredients 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 and
Asia and has manufacturing facilities in the UK and US. 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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