Treatt revenues and orders up and $60m global expansion on target
Rising revenues and order books and a $60 million global expansion programme in full flow has marked a terrific first half for Treatt, the Bury St Edmunds-based manufacturer and supplier of innovative ingredient solutions for the flavour, fragrance, beverage and consumer product industries.
Following six consecutive years of growth, the business has continued to perform well in the current financial year with revenue for the six months to March 31 up by around seven per cent year-on-year.
CEO Daemmon Reeve said the growth in the period was particularly pleasing against a market backdrop of price weakness in some key raw materials for Treatt’s largest product category, citrus, which it expects to continue into the second half.
Whilst citrus continues to dominate Treatt’s category mix, the fruit and vegetables, tea and sugar reduction categories are also driving revenues, representing 69 per cent of the year-on-year growth.
The vast majority of Treatt’s portfolio is targeted at the growing demand from consumers for more natural and clean-label products which is feeding both into the results as well as the encouraging opportunity pipeline.
Reeve said a key element of the group’s current five-year strategy through to 2022 was to invest in the capacity and scientific capabilities to deliver long term growth and value for shareholders.
Treatt confirms that the $14m expansion of its US facility was completed in March and will become fully operational in June. In the UK, construction of Treatt’s £35m ($46m) relocation project is expected to start this summer, with occupancy from summer 2020.
The business says that whilst it has in place a hedging strategy to try to ensure that the impact of exchange rate movements is broadly neutral to the income statement over the course of a financial year – as has been experienced previously – there can be material effects over shorter periods. During the first half there was a weakening in the USD/GBP exchange rate and, as a result, the board anticipates a net negative FX impact on the results for the period of approximately £0.6m.
Reeve said Treatt was encouraged by the order book “which is comfortably up compared with the same time in the prior year, notwithstanding the weakness in some key citrus raw material input prices.
“This reflects the success of our continued strategic focus on key product categories and geographical markets and the board, therefore, continues to believe that profit before tax and exceptional items will be in line with its expectations for the financial year ending September 30.”