Highlights
· Strong operating performance across multiple categories and customers, with new organic revenue growth and enhanced margins from improving product mix.
· Profits for the first four months of the current financial year are expected to be ahead of Board's previous expectations for the period.
· Continued partnering with customers to develop exciting products in the fast – evolving beverages market is driving potential for further revenue and margin growth.
· Headwinds from COVID-19, the geopolitical landscape and commodity/currency risks remain.
· Overall, the Board is cautiously optimistic that the current strong momentum will result in profit before tax and exceptional items for FY21 materially exceeding the current market consensus * of £15.1m.
Trading performance
As reported in our FY20 results announcement on 24 November 2020, the Group had a strong start to the new financial year, and this has continued with the trading performance in the year to date being significantly better than expected.
The Group is performing particularly well in its citrus, health & wellness, fruit & vegetables and tea categories. Some material new business wins have been achieved including in the global alcoholic seltzer category which is continuing to grow strongly. Treatt is well positioned as a supplier of natural extracts including its sugar reduction solutions; the Group's technical expertise enables it to add significant value to customers across a growing range of applications resulting in margin expansion as well as revenue growth.
Whilst some parts of our product portfolio continue to be impacted from subdued on-trade demand due to the closure of venues in many parts of the World, this has been more than offset by increased demand from off-trade channels.
The Board considers that the strong trading momentum shown in these first few months of the current financial year will continue into H2 but is mindful that the Group faces the same uncertainties as our customers regarding the ongoing COVID-19 global pandemic, potential further lockdowns in our key markets and the volatile geopolitical landscape , with potential impacts on demand, FX rates and commodity prices. Nevertheless, the better than expected performance for the first four months of the year and the level of the order book leads the Board to be cautiously optimistic about continued growth in revenues, margins and profits for the rest of FY21, with profit before tax and exceptional items for FY21 expected to materially exceed current consensus * of £15.1m.
Daemmon Reeve, CEO, commented:
“We're encouraged by our strong trading momentum continuing into the current financial year. Performance has been positive across a number of our key categories, with particular growth in our solutions for the expanding alcoholic seltzer market, utilising our expertise in natural extracts.
“Whilst mindful of the global backdrop, we are confident that we can make further progress this year, to grow organic revenue across an increasingly global and diversified customer base who benefit from our technical expertise and value-add approach.”