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RNS Number : 8944N Fevertree Drinks PLC 26 January 2023
This announcement contains inside information
Fever-Tree Drinks plc
FY22 pre-close trading update
Fever-Tree, the world's leading supplier of premium carbonated mixers,
announces a trading update for the year ending 31(st) December 2022, ahead of
reporting its Preliminary Results on 22(nd) March 2023.
Financial highlights
Revenue, £m FY22 FY21 Change
UK 116.2 118.3 (2%)
US 95.6 77.9 23%
Europe (Fever-Tree brand revenue) 89.2 78.8 13%
Europe total revenue* 101.0 88.2 15%
ROW 31.5 26.7 18%
Total 344.3 311.1 11%
*includes GDP portfolio brand revenue
Fever-Tree continued to deliver strong top line growth, increasing Group
revenue by c.11% year-on-year to c.£344 million. We continue to invest behind
and successfully pursue a growing global opportunity, as demonstrated by the
c.18% growth achieved across the US, Europe and Rest of the World regions.
Alongside this, the steps taken by the business to offset significant global
inflationary cost pressures have meant the Group expects to deliver Adjusted
EBITDA of c.£39 million, in-line with expectations.
UK
· Overall revenue declined by 2%, but the brand continues to gain
distribution and market share, remaining the clear leader of the UK mixer
category 1 (#_ftn1) .
· On-Trade revenue increased by c.28% year-on-year, however, the
widespread industrial action undertaken across the UK rail network in the run
up to Christmas had a notable impact on sales in what is traditionally a very
strong trading period.
· In the Off-Trade, whilst the mixer category was annualising tough
comparators after a very strong period of sales during lockdowns, the brand
has increased volume share from pre-COVID levels 2 (#_ftn2) . In addition to
our core mixers, we have made significant progress expanding into the adult
soft drink category, with incremental distribution, very positive initial
performance and an ambitious plan for 2023.
US
· Fever-Tree delivered very good growth in 2022, increasing by 23% (13%
at constant currency). This positive performance was despite the impact of
industry-wide port congestion and logistics disruption, without which the
underlying demand for the brand would have translated to an even stronger
sales performance during the year, giving us confidence going into 2023.
· We are making good operational progress, continuing to ramp up local
US production, as well as onboarding local glass supply.
· We also acquired Powell & Mahoney, a US non-carbonated cocktail
mixer brand. This acquisition provides Fever-Tree with a platform to
accelerate our entry into this exciting adjacent category in 2023.
Europe
· Revenue grew by 15% (16% at constant currency), driven by a strong
performance in Southern Europe, and slightly offset by softening consumer
sentiment in Germany.
· Our On-Trade sales across the region accelerated from Q2 onwards
following the removal of restrictions and a strong rebound of tourism.
· Fever-Tree continued to perform well in the Off-Trade, remaining the
largest premium mixer brand in Europe and the biggest driver of growth and
premiumisation in the category.
Rest of the World
· Our momentum continued with growth of 18% (14% at constant currency),
with particularly strong sales growth in Australia, where the brand is driving
premium mixer growth across a broad range of categories.
· During the year, we made two significant step changes in our
route-to-market across the globe by transitioning to a new, more powerful
distributor in Canada and signing a partnership agreement with Asahi Breweries
in Japan, reflecting the significant long-term growth opportunities in two key
international markets.
FY23 outlook and guidance
· Macro-economic volatility and uncertainty remains elevated in 2023.
However, as an increasingly diversified global business, we remain confident
of delivering strong growth, with momentum continuing across our growth
regions, especially the US, and a return to growth in our most established
market in the UK.
· As a result, we are introducing a revenue guidance range of £390m to
£405m in 2023. This is in line with expectations and represents growth of
+13% to +18% across the Group.
· Inflationary cost pressures remain, with further double-digit
percentage increases across key input costs including filling fees,
ingredients and packaging.
· We continue to take steps to off-set these significant incremental
costs. A combination of pricing actions across regions, including the US,
cost-saving initiatives and increased local US production would have driven
margin improvement this year.
· However, the impact of elevated European energy costs into glass
bottle pricing will be material in 2023. Whilst energy pricing has recently
reduced, it remains volatile and at least three times higher than 2021 levels,
impacting both the cost of raw materials and the direct energy cost in glass
manufacture.
· As a glass-led business, with c.80% of our sales mix in glass
bottles, we are particularly exposed to this significant headwind. We now
estimate that the direct energy component of glass manufacture alone
represents a c.£20m additional cost to the business in 2023 compared to our
prevailing glass pricing in Q1 2022.
· This premium format remains an integral part of our long-standing
market-leading proposition, and as such we are working closely with our glass
suppliers to mitigate this cost wherever possible as we progress through the
year, whilst any further recalibration of energy pricing towards more
normalised levels would allow for significant margin improvement in 2024.
· As a result of the above impacts, most notably the continued impact
of elevated European energy pricing on glass, we are working to deliver EBITDA
in-line with 2022 and introduce an EBITDA guidance range of £36m to £42m for
2023.
Tim Warrillow, CEO of Fever-Tree commented:
"2022 has seen the Fever-Tree brand continue to gain traction and prominence
across the globe resulting in double digit revenue growth and profits in line
with expectations. Furthermore, the brand continues to increase its clear
global market leadership position and remains the primary driver of this
increasingly prominent international drinks category.
Looking ahead to 2023, we remain very confident in delivering strong top line
growth, most notably in the US. Whilst the initiatives we are implementing
would have driven margin improvement during the year, the energy related cost
increases, which are particularly acute across the glass industry, mean we
expect to deliver absolute EBITDA in-line with 2022. These temporary
additional costs will unwind significantly as the energy price recalibrates
and we are resolute in continuing to invest for the longer-term, by
introducing new products, expanding into adjacent categories such as adult
soft drinks and delivering exciting new marketing campaigns across our
regions."
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 Alex Wright 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
This announcement contains inside information. The person responsible for
arranging the release of this announcement on behalf of the Company is Andy
Branchflower
1 (#_ftnref1) CGA & IRI
2 (#_ftnref2) Nielsen 2022
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