- Full year outlook reiterated
- Market share gains across key markets
- Well positioned ahead of key summer trading
Investors cheered a trading update from Fevertree Drinks (FEVR:AIM) as the shares fizzed up 3% to £11.15 after the premium mixers company said it was comfortable with full year expectations and continues to take market share across key categories.
The shares have gained 11% year to date compared with a 5% advance in the FTSE AIM 100 index. They remain around 58% below the highs of £27 reached in 2021 as the company has struggled to combat inflationary pressures.
WHAT ARE FULL YEAR EXPECTATIONS?
The company has ambitions to double EBITDA (earnings before interest, tax, depreciation, and amortisation) in 2024, representing a margin on sales of around 15%.
The posh mixers firm expects to grow the Fevertree brand by 10% and to deliver strong double-digit sales growth in the US and return the UK and ROW (rest of the world) back to growth.
The company has previously guided for total revenue growth of 8% which is slightly above consensus forecasts which see revenue growing 7.4% to £391 million.
In the ROW region the group expects to deliver strong growth following the setup of a new subsidiary in Australia.
Those ambitions look more achievable after the company confirmed today that it has strengthened its category leading position in the UK driven by the performance of Rum, Vodka and other spirits as well as cocktail mixers led by Mojito and Margarita serves.
The brand continues to be the biggest contributor to growth in the US carbonated mixer at category in retail and extended its leading positions in the tonic and ginger beer categories.
WHAT THE EXPERTS ARE SAYING
Liberum analysts noted that the consumer demand backdrop remains weak across Fevertree’s main markets, which means ‘delivery of the top-line target would require good trading during the key summer period’.
Liberum notes a mitigating factor is that year-on-year comparisons get easier from the second half, concluding: ‘While top-line concerns for 2024E are fair, margin performance should still be on track to meet or beat guidance’.
Investment director Russ Mould at AJ Bell commented: ‘Fevertree’s latest trading update goes some way to reassure that the business is back on track ahead of its key summer trading period.
‘Importantly, the company seems to be gaining market share versus rivals, which include the larger consumer goods names seeking to ape Fevertree’s premium offering.
‘A longer-term concern for the business may be the shift in attitudes among Gen Z who are less likely to indulge in regular or heavy drinking.’
Disclaimer: Financial services company AJ Bell referenced in the article owns Shares magazine. The author of the article (Martin Gamble) and the editor (Steven Frazer) owns shares in AJ Bell.
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