REG - Fevertree Drinks PLC - FY23 pre-close trading update

Fevertree DrinksAnnouncement

25/01/2024 07:00

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RNS Number : 8288A  Fevertree Drinks PLC  25 January 2024

Fever-Tree Drinks plc

FY23 pre-close trading update for the year ending 31(st) December 2023

 

Good operational progress has resulted in a doubling of EBITDA in the second
half of the year despite a challenging trading environment.

Financial highlights
 Revenue, £m                           FY23   FY22   Change  Constant currency
   UK                                  114.8  116.2  (1%)
   US                                  117.0  95.6   22%     24%
   Europe (Fever-Tree brand revenue)   94.6   89.2   6%      4%
   Europe total revenue*               105.4  101.0  4%      2%
   ROW                                 27.2   31.5   (14%)   (10%)
 Total                                 364.4  344.3  6%      6%

*includes GDP portfolio brand revenue

 

Fever-Tree delivered Group revenue growth of c.6% year-on-year to c.£364
million. Despite macroeconomic headwinds, the brand continues to make good
progress, particularly in the US, and has delivered market share growth across
our key markets. The Group expects to deliver Adjusted EBITDA for the full
year of c.£30 million, within our guidance range. This means the Group
doubled EBITDA in the second half of the year following significant progress
in driving operational efficiencies and offsetting material inflationary cost
pressures, and will continue to deliver significant margin improvement in
2024.

UK - Continued share gains

·    Total UK revenue was ahead of guidance reflecting good trading in Q4,
particularly in the On-Trade.

·    In the Off-Trade, the brand delivered notable growth in our Gingers,
Flavoured Sodas, and Adult Soft range, as well as a strong start for our new
cocktail mixers, whilst in the On-Trade, despite the continued pressure on the
cost of living, the brand ended the year with its strongest ever value
share 1  (#_ftn1) .

·    The increasing diversification of the portfolio has ensured the brand
remains the clear leader of the total UK mixer category 2  (#_ftn2) and best
placed to capture gains as sentiment continues to improve.

US - Strong volume and revenue growth

·    Fever-Tree delivered strong revenue growth of 22% during the year
(24% at constant currency) despite the impact of a greater than expected FX
headwind and a subdued macroeconomic environment in Q4.

·    In the Off-Trade, Nielsen recorded sales increased by 24%
year-on-year 3  (#_ftn3) , driven by the strong performance of our new can
format across all flavour categories.

·    The brand had a very encouraging December and continues to perform
ahead of the mixer category, extending our number one value share in both the
Tonic and Ginger Beer categories(3), with our innovation also performing
strongly as we continue to broaden our category opportunity.

Europe - Brand continues to strengthen despite challenging trading backdrop

·    Fever-Tree brand revenue grew by 6% (4% at constant currency) during
the year. We continue to extend our premium mixer leadership position across
Europe 4  (#_ftn4) , but our revenue growth was impacted by subdued consumer
sentiment in several markets, most notably in Germany. This meant our total
revenue in Europe, including GDP portfolio brands in the German market,
increased by 4% (2% at constant currency).

·    We strengthened our route-to-market across the region and
successfully completed the transition to new distributors in France and Greece
during 2023, setting the brand up to take advantage of the significant
category growth opportunities in these markets over the coming years.

Rest of the World - Building the platform for long-term growth

·    Despite a positive second half performance, Fever-Tree's revenue
declined by 14% for the full year (-10% at constant currency). Our revenue
across the Rest of the World region excluding Australia was in growth,
however, the transition to a new subsidiary set-up in Australia, which
included a one-off inventory buy-back in the first half of the year, impacted
revenue delivery for the total region.

·    We remain the number one premium mixer in Australia 5  (#_ftn5) due
to good underlying momentum of the brand and look forward to 2024 with
optimism having set ourselves up to take advantage of this attractive market
going forward.

·    Fever-Tree also continues to make progress across our other Rest of
the World markets, with exciting plans in Japan as we build on our
relationship with Asahi Breweries.

FY24 outlook and guidance

·    We expect to deliver good growth in 2024 and reiterate our guidance
of 10% revenue growth for the Fever-Tree brand. We are refocusing our
portfolio of non-Fever-Tree brands in Germany and, as such, expect c.£7
million reduction in portfolio brand revenue in 2024. As a result of this, we
expect total Group revenue to grow by 8%.

·    Importantly, we remain confident of delivering a significant
improvement in gross margin in 2024, underpinned by new glass contracts with
fully hedged energy pricing, lower Trans-Atlantic freight rates, a
continuation of cost-saving initiatives, alongside our long-term approach to
sustainable price increases across our markets. Therefore, we are also
reiterating our guidance of c.15% Adjusted EBITDA margin for 2024.

Tim Warrillow, CEO of Fever-Tree commented:

"The Fever-Tree brand has performed well in 2023, growing our market share in
all of our key markets, despite a challenging macroeconomic environment. The
US ended the year as our largest region, where we have extended our leadership
position in both the Tonic and Ginger Beer categories. The brand enjoyed a
strong Christmas trading period in the UK, especially in the On-Trade, whilst
at home, our new Espresso Martini mixer clearly became a festive drink of
choice. Despite recession in Germany impacting our European performance and
the one-off effect of the transition to our new subsidiary in Australia, we
remain confident of driving good growth in those regions in 2024.

Importantly, we have driven a significant increase in our EBITDA margin in the
second half of the year and are confident that the operational efficiencies we
have implemented, alongside a reduction in inflationary cost pressures, will
drive a doubling of EBITDA in 2024 and provide a strong platform for
profitable growth going forward."

Fever-Tree will announce its Preliminary Results for the year ending 31(st)
December 2023 on 26(th) March 2024.

For more information please contact:

Investor queries

Ann Hyams, Director of Investor Relations I ann.hyams@fever-tree.com
(mailto:ann.hyams@fever-tree.com) I +44 (0)20 4516 8106

Media queries

Oliver Winters, Director of Communications I oliver.winters@fever-tree.com
(mailto:oliver.winters@fever-tree.com) I +44 (0)770 332 9024

 

Nominated Advisor and Broker - Investec Bank plc

David Flin I +44 (0)20 7597 5970

Corporate Broker - Morgan Stanley & Co. International plc

Andrew Foster I Jessica Pauley I +44 (0)20 7425 8000

Financial PR advisers - FGS Global

Faeth Birch +44 (0)7768 943 171; Anjali Unnikrishnan +44 (0)7826 534 233

 1  (#_ftnref1) CGA

 2  (#_ftnref2) CGA & IRI 2023

 3  (#_ftnref3) US Nielsen 52 weeks to 30 Dec 2023

 4  (#_ftnref4) Nielsen 52 weeks to 31 Dec 2023

 5  (#_ftnref5) Woolworths & Coles scanner data

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