Treatt plc shares tumble on lower profit despite record revenue
Shares in Treatt plc, which deals in natural extracts and ingredients for global markets, fell by around 5.5 per cent (55p) to 949p a share on early UK trading despite the Suffolk company reporting record half-year revenue to March 31.
Revenue rose to £66.3 million from £60.8m last time and £53.6m in H1 the year before but pre-tax profit tumbled from £10.4m in H1 2021 to £6.3m this time.
The board has been sufficiently confident to hoist the dividend to 2.50p a share from 2p last year and 1.84p in H1 the year before.
CEO Daemmon Reeve reported a strong order book – up more than 25 per cent – and outstanding prospects; all this on top of Treatt starting to move staff into a flagship new headquarters building in the region.
Reeve said Treatt was on track to deliver full year expectations with a reversion to traditional H2 profit weighting.
He said: “We continue to grow our revenue and have a very strong order book going into the second half of the financial year.
“The momentum we have in the business underlines the importance of the significant benefits we expect to gain from both investment in our people and the increased capabilities and capacity we will unlock from our new UK facility at Skyliner Way in Bury St Edmunds.
“Our established business model and track record of managing the input costs of our natural products has meant that we continue to deliver outstanding service for our customers and healthy returns for our shareholders, despite supply chain and other macro headwinds.
“Branded beverages are seen as affordable luxuries so we are well insulated against rising inflationary pressures and our strong order book gives us confidence that we are on track to perform in line with expectations for the full year.”
In terms of the balance sheet – predominantly as a consequence of the working capital outflow in H1 – the group’s funding position moved to a net debt balance of £19.8m at March 31, which compares with £9.1m at the start of the period.
This comprised gross cash of £4.9m, bank loans and borrowings of £24.3m and net lease liabilities of £0.4m. Treatt has borrowing facilities of £5.4m which remained undrawn together with an undrawn accordion facility of £6.5m.