Fevertree Drinks PLC on Tuesday reported healthy revenue growth, as sales leapt in the US, but it couldn’t prevent a double-digit drop in profit in 2023.

Shares in Fevertree Drinks, the London-based maker of carbonated mixers, rose 1.9% to 1,095.99 pence each in London on Tuesday morning.

In 2023, Fevertree said pretax profit declined 28% to £22.2 million from £31.0 million. Diluted earnings per share fell to 13.18p from 21.32p.

This was despite a 5.8% increase in revenue to £364.4 million from £344.3 million.

UK sales fell 1.2% to £114.8 million from £116.2 million, but this was offset by a 22% increase in US sales to £117.0 million from £95.6 million. The US is now the biggest the group’s largest revenue-generating region.

Elsewhere, sales in Europe grew 4% but rest of the world sales dropped 14%.

Administrative expenses climbed to £96.2 million from £88.2 million, while depreciation charges increased to £6.3 million from £4.3 million.

Fevertree said it had faced macroeconomic ‘headwinds’ but had continued to ‘strengthen its position globally, with market share gains in all our key markets’.

It said non-tonic products comprised around 40% of global sales during 2023, up from around 25% in 2019.

Gross margin of 32%, was in-line with expectations, although down from around 35% the year before.

But Fevertree highlighted a 280 basis points improvement in gross margin the second half of the year compared to the first half, and said further improvements were to come in 2024.

Fevertree said 2024 has started in-line with expectations and remains on track to double earnings before interest, tax, depreciation and amortisation in 2024.

In 2023, adjusted Ebitda totalled £30.5 million, down 23% from £39.7 million in 2022.

‘The Group remains comfortable with consensus expectations of c.10% growth for the Fever-Tree brand in the year ahead, with a continuation of strong double-digit growth in the US and a return to growth in the UK and Rest of the World, where we expect to realise the benefit of our new subsidiary set-up in Australia.’

Fevertree reiterated guidance of a 600bps gross margin improvement during 2024 underpinned by improved glass pricing, with fully hedged energy costs and materially lower trans-Atlantic freight costs.

It expects operating expenses to be around 23% of revenue and, as a result, the expects to deliver adjusted Ebitda margin in line with previous guidance of around 15%.

The annual dividend was increased by a modest 2.0% to 16.64p per share from 16.31p.

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