Fevertree shares reversed sharp losses on Tuesday as bargain hunters stepped in after the release of their first half 2023 interim results.
Fevertree’s interim results were a tale of two stories. The soft drinks and mixers company’s push into the US is paying off with 40% revenue growth in the six months to 30th June. However, higher glass costs and poor performance in the UK smashed gross profit margins.
Group revenue rose 9% to £175.6m with the US and a 40% jump in revenue to £56.1m doing all the heaving lifting.
Gross margins fell to 30.7% as gross profit sank to £53.8m. Adjusted EBITDA more than halved to £10.2m.
“Unfavourable weather for much of the summer has made it harder to shift tonic water and other mixers for spirits, judging by comments from Fevertree,” said Russ Mould, investment director at AJ Bell.
“The business can’t seem to get a break. Despite delivering strong growth in the US, gaining market share in the UK and seeing progress in other parts of the world, Fevertree still seems to have as many critics as it does fans.
“Admittedly, profits, margins and cash fell in the first-half period which suggests a business under pressure. Its challenge is to reverse that trend and get everything back on track.”
Although analysts and traders were initially pessimistic about the update, with shares down over 5% in early trade, many chose to look past cost pressures to focus on booming US demand, and bid the stock back up to trade positively at the time of writing.
The company expects a much better second half and is guiding for FY23 EBITDA in the range of £30m to £36m.