An international innovation strategy is paying handsome dividends for Bury St Edmunds flavour and fragrances specialist Treatt plc.
Since re-engineering the business, Treatt revenues and profits have taken off – evidenced by an excellent set of interims to the end off March. The UK share price was up almost five per cent to 161.75p as Treatt announced that adjusted earnings per share increased by 37 per cent.
Treatt, which manufactures and supplies ingredients for the flavour, fragrance and consumer goods industries, saw revenues for the six months increase 11 per cent to £37.1 million. Adjusted EBITDA rose 27 per cent to £3.8m and adjusted profit before tax was 39 per cent ahead to £2.8m. The interim dividend was raised by 13 per cent to 1.24p.
CEO Daemmon Reeve said: “We continue to focus our efforts on long term success. Our strategy is gaining good traction and, coupled with the effort and focus of our teams across the globe, the results are both translating into profits today and laying the groundwork for opportunities tomorrow.”
Chairman Tim Jones said Treatt was reaping the rewards of playing the long game.
He said: “Whilst this is the second year in succession during which first half profits have grown materially year on year, it is important to emphasise that the group’s profits remain seasonally biased towards the second half. The more important aspect of the first half has been the continuing focus of the group on building stronger and deeper foundations for long term success.
“This is being delivered through the on-going focus on product innovation, added-value manufacture and by partnering with those customers with whom we can develop significant, long-lasting relationships. Earthoil, the group’s personal care division which specialises in organic and fair trade ingredients, has also continued to perform well.
“As we adapt our business to execute the group’s long term strategic objectives, we are doing so whilst retaining and building on the core competencies which have served our business well for many years. We have a long history of global procurement of our raw materials, which helps us to manage the impact of unseasonal weather patterns on crop yields.
“Over the first half of the year, for example, lemon crops in Argentina have been severely affected by unseasonal droughts and frosts. The group is also placing greater emphasis on new product development and technologies than it has done before.
“This has already resulted in encouraging new business wins, especially in our US markets where, for example, we are innovating to support the trend for vegetable-based and calorie-reduced beverages. These, together with other initiatives, will support the group in one of its primary aims of moving up the value chain.”
Jones said that the third quarter of the financial year had started steadily. “With order books up on prior year, the board remains confident at this early stage of the second half that the group will meet its expectations for the year ending September 30, 2014, while continuing to build the foundations for success over the decade to come.”