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Tonic Maker Fevertree's Half-Year Profit Dips On Cost Pressures

Tonic maker Fevertree reported a fall in profit for the first half of the year despite strong demand in Europe and the US, as inflationary pressures and continued exposure to Trans-Atlantic freight costs bit into earnings.

The London-based company also said availability of glass will be restricted in the second half the year and is expected to hurt revenue.

Labour Shortages 

"Labour shortages at our East Coast bottler in the US have impacted our ramp up," Fevertree noted.

The company said it was working with suppliers to secure its glass requirements for 2023.

It added the labour shortages have resulted in greater production volumes required from the UK, which has increased the group's exposure to sea freight costs "in the short term".

Projections 

Fevertree re-iterated it expects full-year core profit to be in the range of £37.5 million ($43.94 million) to £45 million.

The group said uncertainty and the risk of disruption for the year remain high as cost pressures continue to impact its business.

The London-based company said its adjusted core profit for the six months ended 30 June was £21.9 million, compared with £29.2 million the previous year.

CEO Steps Down 

Fevertree announced on the 3 May that its longstanding chairman, Bill Ronald, plans to step down in May next year and the company will start looking for a successor.

The company, appointed Ronald as chairman in June 2013 ahead of Fevertree's debut on the London Stock Exchange (LSE) in November 2014.

Ronald, 67, who has also been the managing director of chocolate maker Mars' UK confectionery operations, will remain as chairman until Fevertree's annual general meeting in 2023 to enable succession planning, the company said.

Read More: Tonic Maker Fevertree Faces Sharp Cost Increases From Ukraine Crisis

News by Reuters, edited by Donna Ahern, Checkout. For more drinks stories, click here. Click subscribe to sign up for the Checkout print edition.

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