10
April 2024
TREATT PLC
("Treatt" or "the Group")
Half
Year Trading Update and Notice of Results
Solid performance in H1 2024, with sales accelerating in the
second quarter and year-on-year profit growth
Treatt, the manufacturer and
supplier of a diverse and sustainable portfolio of natural extracts
and ingredients for the beverage, flavour and fragrance industries,
announces the following trading update for the half year ended 31
March 2024 (the "Period").
HIGHLIGHTS:
· Profit before tax
and exceptional items (PBTE) expected to be marginally ahead of
prior year at c.£7.5m (H1 2023: £7.3m).
·
H1 revenue of £72.1m (H1 2023: £76.0m), reflecting
a subdued Q1 from the impact of destocking as expected and
previously indicated; and an acceleration in Q2, with sales growing
by 5.1% (7.7% in constant currency) compared to the same quarter in
FY 2023.
·
New wins in Premium products and in China, with
both areas growing during H1.
· Improved net operating margin of c.11.0% (H1 2023: 10.1%),
reflecting embedded cost disciplines and self-help
measures
· Net debt unchanged
from 30 September 2023 at £10.3m (FY 2023: £10.4m), reflecting
higher citrus commodity prices and high receivables at period end
from strong March sales; however good cash generation expected in
H2 as receivables convert to cash
·
Looking to H2, we have a solid sales order book
and healthy sales pipeline
·
H2 full year PBTE
anticipated to be in line with the Board's
expectations.
H1
2024 Performance
Revenue for the half year declined
by 5.1% (2.7% decline in constant currency) to £72.1m (FY 2023:
£76.0m) as anticipated. Q1, which is typically our quietest
quarter, saw a decline year on year due to destocking, however
sales were 5.1% ahead (7.7% in constant currency) in Q2 as
destocking softened, as expected.
Heritage sales declined by 6.0%
(constant currency) as citrus customers elected for cheaper
alternatives because of sustained high orange oil prices. Despite
this, we continue to support our customers with innovative and
differentiating solutions. Within Heritage, Synthetic Aroma was up
3.9% (constant currency), which we consider to be reflective of
demand returning in this category which was impacted by destocking
in FY23.
Our higher margin Premium categories
grew 11.6% (constant currency), with multiple wins in Tea in the
North American market. Premium is typically H2 weighted, and as
such we expect further sales and margin growth in the second
half.
In New Markets, China grew 3.3%
(constant currency), securing further wins in leading local
beverage brands and we have established a broader base of local
manufacturing partners. In line with our strategic ambition we have
commenced the scale up of our global Treattzest manufacturing
capacity, and this product will be relaunched in April.
Balance sheet
The Group ended the half year with
net debt of £10.3m (FY 2023: £10.4m). We continue to focus on
working capital management and have successfully reduced inventory
volume by 5.6% since September 2023 (16.7% lower than the
comparable period), offset by higher commodity prices and seasonal
build for strategic and premium demand. An increase in receivables
reflects the strong finish to the half year trading and we
anticipate a reduction in net debt in the second half, in line with
Board expectations.
Ryan Govender, Interim CEO, commented:
"Treatt delivered a robust
performance in the first half, making good progress in line with
our strategic goals. We are particularly pleased with progress in
China, where we continued to invest and consolidate our position,
and in our higher margin Premium categories where we have a number
of active pipeline opportunities. Momentum in the second
quarter was strong, and we recorded our highest ever monthly
revenue in March.
As we enter the second half, we are
encouraged by our solid order book and healthy sales pipeline. The
Board continues to expect to report full
year PBTE in line with expectations."
Notice of results
Treatt's results for the half year
ended 31 March 2024 are expected to be announced on 14 May
2024.
Treatt
plc
+44 (0)1284 702500
Ryan Govender
Interim Chief Executive Officer
Alison Sleight
Interim Chief Financial Officer
Joint
Brokers
Investec Bank Plc +44 (0)20 7597 5970
Patrick Robb
David Anderson
Peel Hunt LLP
+44 (0) 20 7418 8900
George Sellar
Mike Burke
Financial PR
MHP
+44(0) 20 3128 8100
Tim Rowntree
Treatt@mhpgroup.com
Eleni Menikou
Catherine Chapman
