Fever-Tree’s boss is committed to keeping Fever-Tree listed in London even though its share price has been falling and now the United States generates the largest portion of the company’s revenue.
Tim Warrillow launched the high-end mixing brand with Charles Rolls 20 years ago. He said there was no plan to follow the exodus from the FTSE index to Wall Street.
He said: “We have had many approaches on that subject, but we are British and proud to be. We are very happy to be where we are.”
Mixers Group said that the dismal start of the British summer has taken away the sparkle from sales. The company announced first-half results and lowered its expectations for revenue growth from 10 percent to 4-5 percent.
Fever-Tree cut its annual forecast for 2023 at the same time last year by 15% and suffered a £3.3M hit to its US division due to a production problem.
Fever-Tree shares fell by 100p or 11.6% to a new eight-year-low of 762 1/2p in the Aim Index. The stock is still well below its highs, which were almost £40 before the pandemic hit and the cost-of living crisis closed pubs and wallets.
Fever Tree sells mixers in 95 different countries. The biggest markets are America, Canada and Australia. Last year, the United States surpassed the UK as the largest market in terms of revenue.
More recently, it has expanded into flavoured soft drinks, cocktail mixers and adult soft drinks. The most recent is a mixer used for mojitos. The non-tonic product category now accounts for over 40% of global revenue, largely due to the strong growth of ginger beer sales.
Warrillow responded: “It is not something we are aiming for.” When asked if the Carlsberg-Britvic takeover agreement could indicate a similar fate to Fever-Tree. What is interesting to us are the distribution possibilities.
Fever-Tree’s revenue in the first half increased by 2 percent to £170.6 millions. The UK saw a decline of 6 percent to £50.9 Million, and Europe experienced a 12 per cent drop to £44.5 Million. The US revenue was up by 7 percent to £60.3 millions, while revenues in the rest of world were up 57 percent at £14.9million.
The company’s dividend was up by 2 percent at 5.85p/share.
Warrillow (49), who is still chief executive, stated that the group “performed very well in a difficult market background”, particularly in the US and other world regions, but the performance of the UK and Europe in the first half of the year was affected by the unseasonable weather conditions at the beginning of the summer. Low consumer confidence also affected the on-trade, which includes bars and restaurants.
He said, however, that the situation has improved significantly “as the summer finally arrived”, adding, “While the first half of the year was challenging, we control the controllables.” We are optimistic about an acceleration in growth during the second half of this year, and we have seen a more positive trading performance between July and August.
Matthew Webb, an analyst at Investec, said: “Fevertree has done the right thing, gaining market share and delivering a gross margin recovery in a challenging market.”
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