REG - Treatt PLC - Trading Update

TreattAnnouncement

10/04/2025 07:00

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RNS Number : 4130E  Treatt PLC  10 April 2025

 

10 April 2025

 

TREATT PLC

("Treatt" or "the Group")

 

Half Year Trading Update and Notice of Results

 

 

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 2025 (the "Period").

 

Highlights:

·    Revenue of £64.2m (H124: £72.1m), reflecting lower Heritage and
Premium volumes

·    Adjusted EBITDA expected to be c£6.6m (H124: £10.6m)

·    Profit before tax and exceptionals (PBTE) expected to be c£3.6m
(H124: £7.6m)

·    Net cash position of £0.9m (FY24: Net debt £0.7m) reflecting robust
cash generation

·    Meaningful strategy progression, including further broadening into
Premium categories

·    Whilst the order book and pipeline are robust, including some
exciting new customer wins in Premium, we now expect full year PBTE to be
between £16m and £18m, reflecting an ongoing softening of consumer
confidence in North America, recent geopolitical uncertainty and sustained
high citrus prices, resulting in lower customer demand

·    Reflecting the Board's ongoing confidence in Treatt's strategy and
medium-term outlook, the Group's strong cash performance, and in line with the
Group's capital allocation framework, today the Group has separately announced
a £5m share buyback programme

 

Outlook:

The combined impact of several factors means we now expect Revenue of between
£146m and £153m for the full year, and PBTE between £16m and £18m.

This revision reflects the following:

·    Lower demand in Heritage due to sustained high citrus prices affecting
buying patterns, has led to customer reformulation, resulting in a decline in
value-added citrus volumes, a trend we expect to continue for the remainder of
the year. However, we continue to leverage our deep knowledge and product
capabilities to provide alternative solutions to our customers, against a
challenging market backdrop.

·    Consumer confidence in the US has softened, impacting demand for
carbonated soft drinks and the overall beverage market in North America. Macro
pressures, including recent geopolitical uncertainty in the US, have and are
expected to continue to impact on our sales demand with a softening in the
beverage market.

Notwithstanding these trading challenges which we expect to moderate, we are
encouraged by some exciting wins in Premium, including securing a large new
customer in North America, and capitalising on the low and no sugar trend.
Additionally in New Markets, we have a healthy pipeline of opportunities for
H2 and are progressing distribution arrangements to expand our reach.

In order to mitigate inflationary cost pressures and invest in growth areas,
we have implemented several self-help measures in H1, with focus on
simplification and efficiency gains. We do not anticipate any significant
increase in administrative expenses in FY25 compared to FY24.

H1 Summary:

Revenue for the half year declined by 11% (10% decline in constant currency)
to £64.2m (H124: £72.1m).

Heritage sales declined by 10% in constant currency, mainly as a result of
lower volumes of value-added citrus, driven by sustained high citrus prices
affecting buying patterns. We are encouraged by the performance of Synthetic
Aroma and Herbs, Spices and Florals, where volumes have increased
year-on-year.

Higher margin Premium sales declined by 13% in constant currency, with softer
consumer demand across key premium categories in North America due to lower
consumer confidence arising from macro and geopolitical uncertainties. Premium
is typically H2 weighted through Spring and Summer, and as such, we still
expect sales improvement in H2.

In New Markets, we are encouraged by growth in Treattzest and China. The
Shanghai Innovation Centre is now leased and on track to open later this
calendar year. We expect this to accelerate China growth through customer
co-collaboration, and we are also excited by a number of new customers and a
growing pipeline in China following investment in the sales team.

The situation around US trade tariffs remains fluid, and we are following
developments closely to better understand the extent to which Treatt will be
affected, both directly and indirectly. However Treatt's diverse supply chain,
including our significant manufacturing presence in the US and UK, gives us
the flexibility to support our customers in diverse ways in different markets.

 

Balance sheet

The Group ended the half year with Net Cash of £0.9m (FY24: Net debt £0.7m).
We continue to focus on working capital management and we expect further cash
generation in H2.

In line with our capital allocation framework, and reflecting Treatt's strong
cash performance and the Board's confidence in Treatt's strategy and
medium-term outlook, the Board has separately announced a £5m share buyback
programme today.

David Shannon, CEO, commented:

"Treatt made meaningful strategic progression in the first half of the year.
We focussed on expanding our reach with customers and I am particularly
pleased that our Shanghai innovation centre, which will be instrumental in
accelerating growth in China, is on track to open later this year. Our new
French sample laboratory opened in April which will provide faster more
efficient customer co-collaboration. Efforts to expand reach in Asia are
progressing well. We are winning with our technologies in line with global
trends, including sugar reduction to broaden into high value categories. Our
new website launches in May to support enhanced customer centricity.

Whilst we are disappointed by the impact on profitability of predominantly
short-term trading challenges, we are encouraged by our robust order book and
sales pipeline, and expect to realise the benefit of self-help measures within
the second half.

We remain confident in the medium-term outlook underpinned by the strategic
growth drivers for Treatt."

Notice of results

Treatt's results for the half year ended 31 March 2025 are expected to be
announced on 13 May 2025.

 

Treatt plc                             +44 (0)
1284 702500

David Shannon                     Chief Executive Officer

Ryan Govender                    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

 

Financial PR

MHP
+44(0) 20 3128 8100

Tim Rowntree                       Treatt@mhpgroup.com

Eleni Menikou

 

This announcement contains inside information within the meaning of the Market
Abuse Regulation. The person responsible for arranging release of this
announcement on behalf of Treatt is Nick Hartigan, General Counsel &
Company Secretary.

 

About the Group

Treatt is a global, independent manufacturer and supplier of a diverse and
sustainable portfolio of natural extracts and ingredients for the flavour,
fragrance and multinational consumer product industries, particularly in the
beverage sector. Renowned for its technical expertise and knowledge of
ingredients, their origins and market conditions, Treatt is recognised as a
leader in its field. The Group employs approximately 360 staff in Europe,
North America and Asia and has manufacturing facilities in the UK and US. Its
international footprint enables the Group to deliver powerful and integrated
solutions for the food, beverage and fragrance industries across the globe.
For further information about the Group, visit www.treatt.com.

 

CAUTIONARY STATEMENT ABOUT FORWARD-LOOKING STATEMENTS

This announcement contains forward-looking statements that are subject to risk
factors associated with, among other things, the economic and business
circumstances occurring from time to time in the countries, sectors and
markets in which the Group operates.  It is believed that the expectations
reflected in these statements are reasonable, but they may be affected by a
wide range of variables which could cause actual results to differ materially
from those currently anticipated.  No assurances can be given that the
forward-looking statements in this announcement will be realised.  The
forward-looking statements reflect the knowledge and information available at
the date of preparation of this announcement and the Group undertakes no
obligation to update these forward-looking statements.  Nothing in this
announcement should be construed as a profit forecast.

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