REG - Treatt PLC - Half Year Trading Update & Notice of Results

TreattAnnouncement

10/04/2024 07:00

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RNS Number : 9365J  Treatt PLC  10 April 2024

 

10 April 2024

 

TREATT PLC

("Treatt" or "the Group")

 

Half Year Trading Update and Notice of Results

Solid performance in H1 2024, with sales accelerating in the second quarter
and year-on-year profit growth

Treatt, the manufacturer and supplier of a diverse and sustainable portfolio
of natural extracts and ingredients for the beverage, flavour and fragrance
industries, announces the following trading update for the half year ended 31
March 2024 (the "Period").

HIGHLIGHTS:

·   Profit before tax and exceptional items (PBTE) expected to be
marginally ahead of prior year at c.£7.5m (H1 2023: £7.3m).

·    H1 revenue of £72.1m (H1 2023: £76.0m), reflecting a subdued Q1
from the impact of destocking as expected and previously indicated; and an
acceleration in Q2, with sales growing by 5.1% (7.7% in constant currency)
compared to the same quarter in FY 2023.

·    New wins in Premium products and in China, with both areas growing
during H1.

·   Improved net operating margin of c.11.0% (H1 2023: 10.1%), reflecting
embedded cost disciplines and self-help measures

·   Net debt unchanged from 30 September 2023 at £10.3m (FY 2023:
£10.4m), reflecting higher citrus commodity prices and high receivables at
period end from strong March sales; however good cash generation expected in
H2 as receivables convert to cash

·    Looking to H2, we have a solid sales order book and healthy sales
pipeline

·    H2 full year PBTE anticipated to be in line with the Board's
expectations.

H1 2024 Performance

Revenue for the half year declined by 5.1% (2.7% decline in constant currency)
to £72.1m (FY 2023: £76.0m) as anticipated.  Q1, which is typically our
quietest quarter, saw a decline year on year due to destocking, however sales
were 5.1% ahead (7.7% in constant currency) in Q2 as destocking softened, as
expected.

Heritage sales declined by 6.0% (constant currency) as citrus customers
elected for cheaper alternatives because of sustained high orange oil prices.
Despite this, we continue to support our customers with innovative and
differentiating solutions. Within Heritage, Synthetic Aroma was up 3.9%
(constant currency), which we consider to be reflective of demand returning in
this category which was impacted by destocking in FY23.

Our higher margin Premium categories grew 11.6% (constant currency), with
multiple wins in Tea in the North American market. Premium is typically H2
weighted, and as such we expect further sales and margin growth in the second
half.

In New Markets, China grew 3.3% (constant currency), securing further wins in
leading local beverage brands and we have established a broader base of local
manufacturing partners. In line with our strategic ambition we have commenced
the scale up of our global Treattzest manufacturing capacity, and this product
will be relaunched in April.

Balance sheet

The Group ended the half year with net debt of £10.3m (FY 2023: £10.4m). We
continue to focus on working capital management and have successfully reduced
inventory volume by 5.6% since September 2023 (16.7% lower than the comparable
period), offset by higher commodity prices and seasonal build for strategic
and premium demand. An increase in receivables reflects the strong finish to
the half year trading and we anticipate a reduction in net debt in the second
half, in line with Board expectations.

Ryan Govender, Interim CEO, commented:

"Treatt delivered a robust performance in the first half, making good progress
in line with our strategic goals. We are particularly pleased with progress in
China, where we continued to invest and consolidate our position, and in our
higher margin Premium categories where we have a number of active pipeline
opportunities.  Momentum in the second quarter was strong, and we recorded
our highest ever monthly revenue in March.

As we enter the second half, we are encouraged by our solid order book and
healthy sales pipeline. The Board continues to expect to report full year PBTE
in line with expectations."

Notice of results

Treatt's results for the half year ended 31 March 2024 are expected to be
announced on 14 May 2024.

Treatt plc              +44 (0)1284 702500

Ryan Govender           Interim Chief Executive Officer

Alison Sleight              Interim Chief Financial Officer

 

Joint Brokers

Investec Bank Plc        +44 (0)20 7597 5970

Patrick Robb

David Anderson

 

Peel Hunt LLP              +44 (0) 20 7418 8900

George Sellar

Mike Burke

 

Financial PR

MHP                            +44(0) 20 3128 8100

Tim Rowntree             Treatt@mhpgroup.com

Eleni Menikou

Catherine Chapman

 

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