Producer of premium drink mixers Fevertree Drinks PLC (AIM:FEVR) saw its shares dip marginally during Tuesday trading, with the impression left by its first-half performance being more sour than sweet.
Overall, the company booked an 11% year-on-year decline in first half revenues, down to £104.2 million. Proportionally, its largest fall was suffered in Europe, with revenues down 29%, to £20.5 million. However, the headline drop was seen in its UK operations, with a 20% decline taking its first half revenues from £60.7 million to £48.3 million. One notable positive was its ability to expand its US offering, with a 39% year-on-year bounce, up to £27.4 million.
The overall fall in revenues, however, led to a corresponding decline in the company’s gross profits, down 20% to £48.7 million, and its gross margin, down 510 basis points to 46.8%.
Similarly, Fevertree saw its adjusted EBITDA dive 35% from £36.7 million, to £23.8 million, which saw its EBITDA margin shed 850 basis points, down to 22.8%.
The situation was mixed – but also largely glum – for the company’s shareholders. On a positive note, the Group increased its dividend per share by 4% year-on-year, up to 5.41p per share. Unfortunately, this upside was offset by diluted earnings per share dropping by 38%, to 14.99p.
The company does find itself in a strong cash position to take itself forwards, though, with its balance increasing by 32% year-on-year for the first half, to £136.9 million.
Fevertree response
Commenting on what he described as the company’s ‘resilient’ first half performance, CEO Tim Warrillow stated:
“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. Despite the On-Trade closure for a large proportion of the first half of the year, we have continued to support our On-Trade partners across our regions and are well-placed to benefit from the return of this important channel.”
“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.”
Investor notes
Having dropped by more than 5% after the first bell, Fevertree Drinks shares are now down 1.46% or 31.00p, to 2,089.00p a share 08/09/20 12:30 GMT. This price is short of its year-to-date high of 2,418.00p seen in July, but well ahead of its year-to-date nadir of 892.00p seen in mid-March.
The Group’s p/e ratio is 40.75, its dividend yield currently stands at 0.73%.