Treatt provides some cheer for the stock market
The UK share price for Suffolk manufacturer Treatt plc opened 10p higher today as the company posted a steady set of results for the six months ended March 31 and reported a strong start to the second half.
Despite a dip in H1 revenues and profit, CEO, Daemmon Reeve said he was encouraged by the level of the order book and current demand for a range of products. He added that – so far – the Bury St Edmunds business had not taken any noticeable hit from the coronavirus pandemic.
Treatt makes and supplies innovative ingredients for the beverage, flavour, fragrance and consumer products industries. Revenue was down 5.3 per cent to £53.6 million from £56.6m and pre-tax profit fell 2 per cent to £6.1m from £6.2m.
The only first-half blight was in the citrus core product category which was impacted by a prior-year fall in raw material prices as expected. Fruit & vegetables, tea and health & wellness (including sugar reduction) categories again performed strongly.
Ongoing investment in the group's capacity to deliver long-term growth has not been interrupted by the COVID19 lockdown. Reeve said US expansion, with a doubling of capacity for high growth categories, was on stream for the spring crops.
The UK headquarters site relocation is well underway but a physical move has been delayed until 2021 due to the COVID-19 lockdown.
Reeve said: “In these exceptional and unexpected times I am pleased to report further encouraging progress for the group. The anticipated weakness of some citrus raw material markets impacted H1 numbers as expected but H2 is likely to witness an improvement in this category.
“Once again the growth in higher margin tea, health & wellness and fruit & vegetables categories continue to make healthy progress in line with the growth in consumer demand for 'better-for-you' premium beverages.
“A particular mention of thanks to our dedicated and talented team at Treatt who have adapted admirably through the very challenging times of the last few months and to whom huge praise is due for the fantastic job they continue do for the business.
“Looking ahead it is difficult to determine the likely impact of COVID-19 on the demand for the group's products and there may be a slowdown in some of our customers' new product development activities in the short term, reflecting the dramatic changes in consumption habits.
“However, the group has traded well since the half-year end and is encouraged by the level of its order book and the current demand for its products from beverage ingredients through to solutions for hand soaps and cleaning products.
“Therefore, whilst there remains much to do, the board is pleased to report that, at this time, trading remains in line with its expectations for the financial year ending September 30.”