10
October 2024
TREATT PLC
("Treatt" or "the
Group")
Trading update for the year
ended 30 September 2024
Strong H2 momentum with full
year sales and profits in line with expectations
Treatt, the manufacturer and
supplier of a diverse and sustainable portfolio of natural extracts
and ingredients for the beverage, flavour and fragrance industries,
today publishes a trading update for the year ended 30 September
2024 ("FY24").
HIGHLIGHTS:
· H2 revenue growth
of 16%, reflecting organic growth from new business wins and a
normalisation in industry demand
· Full year revenue
growth of 5% (7% in constant
currency) to c.£155.2m (FY23: £147.4m)
· Adjusted EBITDA
growth of 7% to c.£24.7m (FY23: £23.0m)
· Profit before tax
and exceptional items (PBTE) growth of 9% to c.£18.8m (FY23:
£17.3m), in line with Board expectations. This builds on the PBTE
growth of 14% between FY22 and FY23, with PBTE having grown by 23%
from FY22 to FY24
· China continues
growth momentum - new Shanghai innovation facility approved to
accelerate locally customised innovation and customer
collaboration
· Strong cost
disciplines and other self-help measures embedded
· Year end net debt
significantly reduced to £0.7m (FY23: £10.4m), ahead of Board
expectations, reflecting the robust cash generation and discipline
of the business
FY24 Performance
Revenue for the year is anticipated
to be £155.2m (FY23: £147.4m), up 5% (7% at constant currency). We
are particularly pleased with the H2 sales momentum, with 16% sales
growth led by improved Heritage and strong China regional
growth.
Revenue in our Heritage segment,
which includes Citrus, Synthetic Aromas and Herb Spices &
Florals has grown by 10% and is expected to be £105.7m. Citrus,
which continues to be a core focus for Treatt, grew by 30% in the
second half, driven by increased volumes in strategic accounts and
cost price increases. Synthetic Aroma grew by 34% in H2 as flavour
house demand normalised.
Revenue in our Premium segment,
which includes Tea, Health & Wellness, Fruit & Vegetables,
is expected to be in line with the prior year at £34.8m, as strong
growth in Tea underpinned by multiple wins in the North America
market, was offset with slower consumer demand in other premium
beverage categories in the second half. Innovation, including
co-collaboration with our customers, remains a key focus to convert
our healthy pipeline of opportunities in this segment
Revenue in our New Market segment,
which includes Coffee, China and Treattzest citrus, declined as
expected by 9% to £14.7m. This decline was primarily due to the
performance of Coffee, as previously communicated at the half year.
China revenues grew 27% in the year, with multiple H2 wins with
local beverage brands. The Board has approved an investment
in a new Shanghai Commercial and Innovation Centre, to accelerate
in-country innovation and customer co-collaboration.
In line with the Board's
expectations, the Company expects to report profit before tax and
exceptional items for FY24 of c.£18.8m which is c.9% ahead of last
year (FY23: £17.3m).
Balance sheet
We are pleased to report a
significant reduction in Group leverage, reflecting the strong cash
generation of the business, as we ended the year with net debt
better than expectations at £0.7m (FY23: £10.4m). Capital
expenditure has returned to normalised levels as expected, and this
will continue as the Group maintains the focus on fast returning
capital projects to improve sales growth.
Operational developments
During the year we have invested for
revenue growth, including expanding our commercial teams, with
experienced industry experts based closer to our customers.
Overall headcount, however, has remained broadly consistent
with prior year. Foreign exchange impacts were minimal in the year.
Following the implementation of self-help measures, the cost base
is expected to be in line with expectations.
David Shannon, CEO of Treatt, commented:
"I am pleased that we will report
good growth in both sales and profit for the year, reflecting the
determined conversion of our order book and strong cost discipline.
Revenue growth in the second half of the year in particular was
strong, with sales pipeline conversion and demand normalising
following industry destocking.
With our value-add products, and
available manufacturing capacity following the investments in
recent years we will start to target greater customer reach in
adjacent markets and new territories. We are confident in Treatt's
long-term prospects.
Since joining Treatt in June, I have
immersed myself in the business, spending time with our brilliant
teams and customers. This process has reinforced my reasons for
joining; this is a strong business full of talented people, with
clear opportunities ahead."
Notice of Results
Treatt's results for the year ended
30 September 2024 are expected to be announced on 4 December
2024.
Enquiries:
Joint Brokers
Investec Bank Plc +44 (0) 20 7597
5970
Patrick Robb
David Anderson
Peel Hunt LLP +44 (0) 20 7418
8900
George Sellar
Financial PR MHP +44 (0) 7710 117
517
Tim Rowntree
treatt@mhpgroup.com
Eleni Menikou
Veronica Farah
About the Group Treatt is a global,
independent manufacturer and supplier of a diverse and sustainable
portfolio of natural extracts and ingredients for the flavour,
fragrance and multinational consumer product industries,
particularly in the beverage sector. Renowned for its technical
expertise and knowledge of ingredients, their origins and market
conditions, Treatt is recognised as a leader in its field. The
Group employs approximately 400 staff in Europe, North America and
Asia and has manufacturing facilities in the UK and US. Its
international footprint enables the Group to deliver powerful and
integrated solutions for the food, beverage and fragrance
industries across the globe. For further information about the
Group, visit www.treatt.com.
