- Full year results meet expectations
- Signs customers no longer de-stocking
- Well placed for growth after investment
Shares in manufacturer and supplier of natural extracts and ingredients to the beverage, flavour and fragrances industries Treatt (TET) pepped up 12% to 475p after the company said it was seeing early signs of a reversal of customer de-stocking.
The shares are down around 15% over the last year and remain more than 60% below their peak in December 2021.
FULL YEAR ON TRACK
Despite customers reducing inventories in response to higher interest rates, the implementation of strong cost discipline and other ‘self-help’ measures means the company expects 2023 pre-tax profit before exceptional items to increase 11% to around £17 million, in line with expectations.
Chief executive Daemmon Reeve commented: ‘We delivered positive growth in sales and profit for the year, reflecting the significant price increase programme and ongoing resilience in our beverage end markets.
‘Revenues in the second half of the year were impacted by certain customers reducing inventories in response to interest rate rises. However, we are seeing some early signs of a reversal of this temporary de-stocking effect.’
RESILIENT PERFORMANCE
Revenue for the year ended 30 September increased 5% to around £147 million, slightly shy of consensus estimates of £154 million.
Core categories including Citrus, Synthetic, and Herb Spices and Florals, which account for two-thirds of total revenues, increased by 1% to around £98 million.
New markets, which include China, Coffee and Treattzest citrus, registered the fastest growth increasing around 60% to £16 million.
Following significant investment in people and production facilities over the last five years, the company said it was well positioned for growth and didn't anticipate significant increases in the cost base, barring inflationary headwinds.
With capital spending returning to normal levels, the group completed a refinancing of its UK bank facility of £25 million for a minimum term of three years.
The company ended the period with net debt of £10.5 million compared with £22.4 million last year.
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