Fever Tree sales remain strong as drinkers stockpiled for lockdown
Fever Tree has enjoyed strong sales in its key markets as consumers increase the frequency and size of orders during the coronavirus lockdown.
The tonic retailer said its “off-trade channel” which accounts for 55 per cent of group sales was characterised by a period of strong sales in the initial weeks of the crisis.
As people stockpiled ahead of the lockdown, Fever Tree says consumers “increased the frequency of their visits and purchased more per basket”.
Although coronavirus will continue to have a material impact on full-year trading, Fever Trade said it is “well-positioned coming out of this extremely difficult period”.
The company has not furloughed any staff as a result of the pandemic.
The figures
Revenue jumped 9.7 per cent year on year to £260.5m in 2019, Fever Tree said today. Profit after tax slipped five per cent to £58.5m, from £61.8m in 2018. Adjusted earnings before interest, tax, depreciation and amortisation (Ebitda) declined year on year to £77m, from £78.6m.
Chairman Bill Ronald said the profit drop reflected a weaker second half in the UK and continued investment.
The group is debt-free, with year end cash of £128m, which has further increased post period end.
The drinks retailer maintains it is in a “robust position to withstand the potential impacts of Covid-19” due to strong underlying cash flow conversion and a low fixed cost base.
As such the company has committed to paying a final dividend for 2019 of 9.88p per share. It brings the total dividend for the year to 15.08p, up four per cent on the prior year.
Broker Liberum said Fever Tree’s update indicated confidence given the circumstances.
Analysts said: “We are encouraged by the company’s marketing plans for the second half of this year. With the supply chain and off-trade holding up well, Fever Tree remains our top pick in Staples.”
“We believe that such marketing efforts will have a meaningful impact on brand awareness and thus sales in the US.”