British tonic maker Fever-Tree Drinks forecast annual core profit to fall short of market expectations, even as profit doubled in the second half on strong US market performance, offsetting inflationary cost pressures in materials.
It said it currently expected a significant improvement in gross margin for 2024, underpinned by new glass contracts with fully hedged energy pricing and lower Trans-Atlantic freight rates.
The company, which manufacturers and sells drink mixers, said it now expected core profit for the year to be about £30 million ($38.16 million), compared with its prior expectations of £30-£36 million.
Analysts on average expected core profit to be about £32.7 million, according to a company provided consensus.
'Confident Of Driving Good Growth'
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."
The company, which was founded in 2003, has been grappling with high glass costs in Britain ever since the Russia-Ukraine conflict pushed up energy costs, forcing it to initiate price increases to protect margins, while also ramp-up its glass production in the US.
Separately, Britvic, a British soft drinks maker, said it witnessed strong trading during the Christmas season, aiding it to project full-year results to be in the range of market expectations.
News by Reuters, additional reporting by ESM.