The maker of mixed drinks expects margins to remain flat in 2022, resulting in an EBITDA range of between £69mln-£72mln
Fevertree Drinks (AIM:FEVR) PLC warned that its results for the current year will be impacted by cost headwinds that are more significant than the maker of mixer drinks had anticipated.
Although it will take action to mitigate the effect of the challenging market conditions, the company expects margins to remain flat in 2022, resulting in an EBITDA range of between £69mln-£72mln, it said in a trading update.
Fever-Tree forecast revenue in the range of £355mln-£365mln for 2022, with demand in the Off-Trade business set to remain above pre-pandemic levels and recovery in On-Trade expected to continue.
The company said it expects to deliver 23% growth in revenues to around £311mln for the year to 31 December 2021. The improvement was driven by Fever-Tree’s Off-Trade channel, which remains well ahead of 2019 levels, and the return of On-Trade business in the second half of the year as COVID-19 restrictions were lifted.
“Unprecedented” macro uncertainty and supply chain disruption continued to impact its EBITDA margin in the second half of 2021, but the strong revenue performance means absolute EBITDA and earnings are predicted to meet expectations, the company said.
UK revenue grew by 15% last year, ahead of expectations, on the back of continued strength in Off-Trade, where sales were 20% ahead of pre-pandemic 2019 levels.
“We believe that Off-Trade sales will remain ahead of pre-pandemic levels, underpinned by the increasing popularity of long mixed drinks and the well-established premiumisation trends,” the company said.
On-Trade UK sales increased by 59% after consumers returned to shops in the second half. But recovery towards 2019 levels was hit by the emergence of the Omicron variant of coronavirus in the final weeks of the year.
In the US, revenues grew by 41% to £77.9mln at constant currencies last year, boosted by the growing popularity of making long mixed drinks at home.
Fever-Tree announced that it has begun work with its local production partner to commission its East Coast bottling line, its second production site in the US. It said local bottling in the US will mitigate agains rising logistics costs and significantly reduce lead times.
In Europe, revenues rose 40% to £88.2mln at constant currencies, well above expectations, on the back of continued Off-Trade progress and the opening of On-Trade the end of the second quarter.
Revenue in the rest of the world (ROW) grew by 6% to £26.7mln, slightly below guidance due to a stock build by its importers in the second half of 2020.
Tim Warrillow, CEO of Fever-Tree commented: “The group continues to deliver impressive growth in every one of our key markets, however, I am of course mindful that short-term logistics challenges and cost pressures remain, along with On-Trade restrictions, albeit at a much lower level than this time last…
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