Fevertree shares tumbled 26.3% to 883p in early afternoon trading on Friday after the drinks company announced a revised FY 2023 EBITDA between £37.5 to £45 million, down from £63 million to £66 million.
The drinks producer reported a significant worsening of cost headwinds in the last few months, predominantly linked to freight and glass expenses.
“Markets have reacted badly to news that costs are significantly higher than expected. Issues getting inventory into the US mean the group’s been more exposed to soaring freight charges,” said Hargreaves Lansdown equity analyst Matt Britzman.
“At the same time, the cost of glass, which makes up 30% of the total cost base, has doubled. The result, a significant hit to gross margin and cash profit guidance for the full year.”
“We’d hoped that local bottling partnerships in the US would start to ease inventory pressures, but labour shortages have scuppered those plans, at least for now. That means, aside from soaring costs, Fevertree hasn’t been able to fully service the demand that clearly exists.”
Fevertree highlighted a HY1 revenue climb of 14% to £160.9 million, led by Europe but reflecting growth across all geographies.
The company said its bar and restaurant sales displayed signs of recovery, and noted a continued strength in consumer demand.
The group confirmed a revenue guidance between £355 to £365 million for FY 2023 on the basis of maintained customer sales.
“That brings us to the positive side, demand for Fevertree’s products is clearly there and that comes through in the stable revenue guidance,” said Britzman.
“The challenge from here is getting costs back under control, and that’s a hefty challenge.”
