Treatt hoists dividend after encouraging Q2

14 May, 2024
Tony Quested
Shares in natural ingredients manufacturer Treatt plc rose 19.61p (4.15 per cent) to 492.61p after a strong Q2 boosted first-half performance and raised hopes for a thumping full year.
Courtesy – Treatt plc

Sales in China were particularly encouraging while tea ingredient sales provided a welcome cup of cheer.

Profit growth and sales both accelerated in Q2 as the Suffolk-based business unveiled encouraging results for the six months to end-March. The interim dividend was raised two per cent to 2.60p a share, reflecting not just the performance but also progression towards 3x dividend cover.

Pre-tax profit increased 7.9 per cent to £7.1 million from £6.6m and net debt was slashed 41.6 per cent to £10.3m; good cash generation is forecast for the second half of the year and the board continues to expect full-year profits in line with expectations.

Treatt saw marked revenue acceleration in Q2 with order patterns normalising and new business wins – a contrast to Q1 2024 (typically the quietest quarter) – which was impacted by anticipated destocking. It carries good momentum into the second half with a solid order book and healthy sales pipeline.

Interim Group CEO, Ryan Govender, said: “These results show a good growth in profit and operating margins. After the expected impact of destocking softened in Q1 2024, momentum in the second quarter was stronger as volumes grew, and we recorded our highest ever monthly revenue in March.

“We are pleased with our progress in China, with new opportunities being won with large local brands there. We also grew our higher margin premium categories, especially in tea.

“There are plenty of active new business opportunities, providing confidence for H2 2024. Momentum in the order book going into H2 2024 is good with a healthy sales pipeline which we are encouraged by.”