FY23 Interim Highlights
· Revenue growth of 9% year-on-year, with a standout performance in the US of +40% growth (+32% constant currency) which is now the Group’s largest region by revenue contribution.
· Strong market share performance globally, achieving our highest ever market share by value in the UK.
· 670 bps reduction in gross margin is in-line with our expectations, driven by product cost headwinds, partially offset by efficiency projects.
· Adjusted EBITDA margin of 5.8% reflects the lower gross margin and phasing of overheads, maintaining our strategy of investing for growth. We therefore expect to drive an improvement in the second half of the year.
· £3.3m exceptional item relating to a production issue in the US. The issue did not impact customer relationships or our ability to supply the market.
· Recommending an interim dividend of 5.74 pence per share, an increase of 2% year-on-year.
| £m | H1 FY23 | H1 FY22 | Change |
| Revenue | |||
| UK | 53.8 | 53.5 | 1% |
| US | 56.1 | 40.1 | 40% |
| Europe Fever-Tree brand revenue | 50.5 | 46.5 | 9% |
| Europe total* | 56.1 | 52.3 | 7% |
| ROW | 9.6 | 15.0 | (36)% |
| Total* | 175.6 | 160.9 | 9% |
| Gross profit | 53.8 | 60.1 | (11)% |
| Gross margin | 30.7% | 37.4% | (670)bps |
| Adjusted EBITDA[1] | 10.2 | 22.0 | (54)% |
| Adjusted EBITDA margin | 5.8% | 13.6% | (780)bps |
| Diluted EPS (pence per share) | 1.20 | 12.08 | (90)% |
| Dividend (pence per share) | 5.74 | 5.63 | 2% |
| Cash | 75.8 | 100.0 | (24)% |
*includes GDP’s portfolio brands
Strategic highlights
· Very strong revenue growth in the US across all categories, extending our leadership position in Tonic Water and Ginger Beer, with continued positive contribution from our product innovation.
· Fever-Tree extended its clear market leadership in the UK with its highest ever value share and encouraging initial performance from our range of cocktail mixers and adult soft drinks.
· Many of the Group’s European markets performed well against strong comparators, growing our leadership position to two thirds of the premium mixer category across the region.
· First half revenue for ROW region reflects a one-off inventory buy-back as part of the transition to our new subsidiary set-up in Australia, positioning us to further drive the opportunity ahead in that market.
· Good progress on key operational initiatives and softening inflationary headwinds underpins our confidence in significant year-on-year margin recovery in 2024.
Outlook and guidance
Whilst we expect to deliver continued good growth in FY23, most notably in the US, our sales performance since period-end has been impacted by the unseasonably poor weather in the UK which has subdued the wider category over the key summer trading period. Therefore, alongside the impact of the inventory buyback in Australia, we now expect to deliver FY23 revenue of between £380m to £390m.
We are making good progress with the mitigation of inflationary cost challenges and are reiterating our gross margin guidance of 31% to 33% for FY23. We remain committed to investing in the substantial future opportunity for the brand across our regions and expect overheads to be in the range £88m to £92m resulting in FY23 EBITDA guidance range of c.£30m to £36m.
Looking ahead to 2024, due to a combination of softening inflationary headwinds and the benefit of the actions we are taking this year, we are confident of delivering significant margin improvement, setting up the Group for strong, profitable growth going forward. Reflecting the momentum in our key growth regions, we are comfortable with current market revenue growth rate expectations for 2024 and expect to deliver an improved FY24 EBITDA margin of c.15%, which is ahead of current market expectations.
Tim Warrillow, CEO of Fever-Tree, commented:
“Fever-Tree delivered good revenue growth in the first half of 2023. We had a standout performance in the US where the brand continues to go from strength to strength, extending our leadership position in the Tonic and Ginger Beer categories. This reflects how well established the brand is becoming in the world’s largest premium spirit market.
In the UK, despite the challenging macro-economic conditions, we ended the first half with our highest ever value share of 45%, which is over 50% higher than our nearest competitor. I have been hugely encouraged by the response to our new innovation, specifically our range of cocktail mixers and adult soft drinks, as shown by the significant and growing listings across both channels. Our European business is growing in depth and breadth and the recent step changes we have made in our route to market across Australia, Canada and Japan reflect the growing potential we see in our Rest of World region.
Whilst the vagaries of the British summer weather have impacted sales since period end, contributing to our revised guidance for the full year, the Group still expects to deliver good growth in the reminder of 2023. Looking ahead to 2024, with a stronger global market position than ever before, a broader product portfolio and our confidence in delivering significant margin improvement, the Group is well set up for strong, profitable growth going forward.”
There will be live audio webcast on Tuesday 12th September 2023 at 10:00am BST. The webcast can be accessed via:
Fever-Tree FY23 Interim Results webcast
For more information please contact:
Investor queries
Ann Hyams, Director of Investor Relations I ann.hyams@fever-tree.com I +44 (0)7435 828 138
Media queries
Oliver Winters, Director of Communications I 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, CFO