TIDMFEVR
RNS Number : 2405A
Fevertree Drinks PLC
20 January 2020
20 January 2020
Fevertree Drinks plc
("Fever-Tree" or the "Group")
Year End Trading Update
Fever-Tree, the world's leading supplier of premium carbonated
mixers, announces its trading update for the year ended 31(st)
December 2019, ahead of reporting its Preliminary Results on 24(th)
March 2020.
Revenue Revenue % change
FY2019 FY2018
GBPm GBPm
United Kingdom 132.6 134.1 -1%
United States of America 47.6 35.8 +33%
Europe 64.4 55.5 +16%
Rest of the World 15.8 12.0 +32%
260.5 237.4 +9.7%
======== ======== =========
Group revenue is expected to be GBP260.5 million representing
growth of c.10%, reflecting the significant progress made during
2019 across many of our regions. However, this performance is below
the Board's expectations, primarily reflecting subdued Christmas
trading in the UK.
Our key growth markets delivered a strong performance with sales
accelerating in the second half in the US and Europe as well as a
notable end to the year in Australia and Canada. As we enter 2020,
the Group is seeing this good momentum continue across multiple
regions. While the UK has performed below expectations, it has been
a year when we have lapped exceptional comparators and despite that
we have retained our clear category leadership position and are
very well placed to return to growth as we proceed through
2020.
UK
As reported, the wider retail environment in the UK experienced
a challenging Christmas with the mixer category not immune from the
weak consumer confidence and corresponding slowdown in spending.
Whilst Fever-Tree remained the clear market leader, the expected
improvement in trading during this important period did not
materialise with the macroeconomic uncertainty leading to a subdued
end to the year across both the On and Off-Trade.
Whilst we expect conditions for the category to remain
challenging in the first half of 2020 reflecting the current level
of consumer confidence, our brand strength, operational
improvements, distribution opportunities, and our innovation
pipeline, alongside softer comparatives in the second half,
provides us with confidence in returning to growth during the
year.
US
The US delivered a particularly encouraging performance in 2019.
We saw significant progress in widening and deepening our
distribution footprint and the Group continued to drive category
growth. We have established a very strong platform over the last 18
months which provides us with increasing confidence in the
opportunity ahead.
Given this progress, we will be investing further in the brand
over the course of 2020. The Group has already conducted a number
of successful trials with key customers, providing both parties
with compelling evidence of our ability to unlock the wider
potential of this very significant market over the medium and
longer term. However, implementing these initiatives is expected to
result in a one-off impact on net revenue growth in 2020 and as a
result, we are revising our growth forecasts for the US business to
low double digit for the year ahead before returning to previously
expected growth rates thereafter.
We are confident that this investment will drive significant
long-term volume and profit growth in what is expected, over time,
to become a very significant region. We look forward to providing
further details of these initiatives at the Full Year Results in
March.
Europe
While the end to the year was slightly behind expectations,
sales in Europe accelerated in the second half with a good
performance across our key territories. The premiumisation trend is
gaining momentum in many countries across the region and Fever-Tree
is outperforming its premium competitors and driving the growth of
the category.
Europe remains a key region for the Group with multiple growth
drivers. There remain opportunities to drive further distribution
through current customers as well as gaining new accounts in both
the On and Off-Trade and expectations for the year ahead remain
unchanged.
ROW
The progress and momentum in territories such as Australia and
Canada continues to be exciting, with our outperformance against
the mainstream incumbent in both markets especially notable. We are
continuing to explore opportunities to invest for further growth in
these markets and expectations for the year ahead remain
unchanged.
Financials
Despite the softer trading than expected in the final months of
the year, we have continued to invest behind the brand for the
longer term, most notably in our growth regions. As a result,
margins have ended the year behind our expectations and we expect
earnings to decline by c.5% when compared to 2018.
As outlined above we plan to continue to invest in our growth
regions in the year ahead and resulting in gross and EBITDA margins
adjusting to c.49% and c.28% for 2020 respectively.
The Group's balance sheet remains strong with the year-end cash
position anticipated to be GBP128m.
Conference Call
A conference call for analysts and investors will be held at
8.00am today.
Participants wishing to dial into the conference call can do so
using the following details:
International Dial
In number: +44 (0) 2071 928000
Confirmation code: 9879766
A 7 day replay facility will be available afterwards on:
International Dial
In number: +44 (0) 3333009785
Replay Conference: ID: 9879766
Tim Warrillow, CEO, commented:
"Despite the subdued end to the year in the UK, we have
delivered a strong performance across many of our regions in 2019
and begin 2020 with real momentum in a number of key growth
markets. Whilst the UK mixer category has clearly not been immune
from the consumer belt tightening seen in recent months, we remain
the clear category leader and have a strong platform to return to
growth during 2020 and beyond.
However this is a global opportunity which remains in its
relative infancy in many markets. The trend towards premium spirits
and premium long mixed drinks continues to gather momentum around
the world. Fever-Tree is the no1 premium mixer globally and our
performance in 2019 across US, Europe and as far afield as
Australia and Canada highlights the fast-growing international
strength of the business.
Our decision to increase our investment in these regions and in
particular in the US reflects our belief and excitement in the
long-term opportunity ahead for the Group."
This announcement contains inside information for the purposes
of article 7 of the Market Abuse Regulation EU No. 596/2014.
For further information:
Fevertree Drinks plc +44 (0)20 7349 4922
Tim Warrillow, Co-founder and CEO
Andy Branchflower, Finance Director
Oliver Winters, Communications & IR Director
Numis Securities - Nominated Adviser and Joint Broker +44 (0)20 7260 1000
Garry Levin
Matt Lewis
Hugo Rubinstein
Investec Bank plc - Joint Broker +44 (0)20 7597 5970
David Flin
Alex Wright
David Anderson
Brunswick Group +44 (0) 20 7404 5959
Jonathan Glass
Fiona Micallef-Eynaud
Notes to Editors:
Fever-Tree is the world's leading supplier of premium carbonated
mixers for alcoholic spirits by retail sales value, with
distribution to over 75 countries worldwide. Based in the UK, the
brand was launched in 2005 to provide high quality mixers which
could cater to the growing demand for premium spirits, in
particular gin, but also increasingly for vodka, rum and whisky.
The Company now sells a range of carbonated mixers to hotels,
restaurants, bars and cafes ("On-Trade") as well as selected retail
outlets ("Off-Trade").
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END
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