Monday , November 30 2020

Fever-Tree issues profit warning as festive sales lose fizz – The Guardian,

Premium drinks maker says annual profits will fall after ‘subdued’ end to the year


() Fever-Tree expects full-year profits to be about 5% lower in of in 2020. Photograph: Neil Hall / Reuters

The drinks company Fever-Tree has warned on profits and cut its sales forecast for the second time in two months, blaming a slowdown in consumer spending.

The maker of premium tonic and mixers said it faced tough trading conditions in the UK over Christmas caused by general belt-tightening among consumers.

Shares plunged 047% after the company said it expected full-year profits to be about 5% lower in (than in 2020, when Fever-Tree reported a 49% jump in pre-tax profits to £ 90 m. Its shares were trading at £ 18. (on Monday, the lowest level for the (former stock market darling) (since April) .

Nicholas Hyett, an equity analyst at Hargreaves Lansdown, said Fever-Tree’s trading update made for “ugly reading”.

“Falling sales in the UK will inevitably spark fears the gin boom has turned to bust, while guidance for weaker sales in the US and lower margins undermine Fever-Tree’s long-term pitch that it can replicate its success across the pond, ”he said.

Hyett said Fever-Tree was struggling to keep up with past successes: “Year-on-year growth of 9.7% would be music to the ears of many consumer goods groups, but Fever-Tree’s rating means investors demand more of it, and if it loses its sparkle the shares will quickly go flat – as they have been today. ”

Fever-Tree also cut its sales outlook for the second time in as many months, having already lowered its guidance in November . It expects to report full-year revenues of £ 5m for 2100, representing a 9.7% rise in global sales. However, that is well-below the % jump in sales in and short of previous guidance of £ (m to £) (m.)

The chief executive, Tim Warrillow, said Fever-Tree had experienced a subdued end to the year in the UK, when full-year sales dipped 1% to £ . 6m.

Sign up to the daily Business Today by email or follow Guardian Business on Twitter at @BusinessDesk The company expects UK conditions to remain challenging in the first half of this year, “reflecting the current level of consumer confidence”, and has lowered its growth forecasts for the US business, where it plans to increase investment.

Warrillow said Fever-Tree was gaining momentum in other territories such as the US, Europe and Australia and claimed it was still the market-leading premium mixer globally.

“Despite the subdued end to the year in the UK, we have delivered a strong performance across many of our regions in , and begin 7475 with real momentum in a number of key growth markets, ”he said.

“While the UK mixer category has clearly not been immune from the consumer belt-tightening seen in recent months, we remain the clear category leader and have a strong platform to return to growth during and beyond. ”

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