Fevertree revenue grows despite UK, Australia difficulties

(Sharecast News) - Fevertree Drinks reported a 6% improvement in total revenue for 2023 on Thursday, reaching £364.4m. The AIM-traded firm said of that, UK revenue was down 1% at £114.8m, while US revenue rose 22% to reach £117m.

In Europe, Fevertree's brand revenue inched up 6% to £94.6m, while total revenue reached £105.4 million, growing 4%.

The rest of world segment faced a 14% revenue decline, or 10% at constant currency, although it saw growth when excluding Australia.

Fevertree said its solid performance in the US contributed significantly to overall growth despite currency headwinds and a subdued macroeconomic environment in the fourth quarter.

In the UK, the brand continued to gain market share, with strong trading in the fourth quarter, especially in the on-trade sector.

The off-trade segment also saw notable growth in various product categories.

Europe maintained its premium mixer leadership position despite challenges in consumer sentiment, particularly in Germany.

Regarding the rest of the world, the company said the fall in revenue was mainly due to the transition to a new subsidiary setup in Australia.

However, Fevertree remained the number one premium mixer brand in Australia, and anticipated further growth in the market.

Looking ahead to 2024, Fevertree said it expected to achieve good growth, reaffirming its guidance of 10% revenue growth for the Fevertree brand.

It also anticipated a reduction in portfolio brand revenue in Germany, but expected total group revenue to grow 8%.

The company said it was confident in achieving a significant improvement in gross margin in 2024 through various cost-saving initiatives and sustainable price increases across its markets.

It reiterated its guidance of a 15% adjusted EBITDA margin for 2024.

"The Fevertree brand has performed well in 2023, growing our market share in all of our key markets, despite a challenging macroeconomic environment," said chief executive officer Tim Warrillow.

"The US ended the year as our largest region, where we have extended our leadership position in both the tonic and ginger beer categories.

"The brand enjoyed a strong Christmas trading period in the UK, especially in the on-trade, whilst at home, our new espresso martini mixer clearly became a festive drink of choice."

Warrillow added that despite recession in Germany impacting its European performance and the one-off effect of the transition to its new subsidiary in Australia, the company remained confident of driving good growth in those regions in 2024.

"Importantly, we have driven a significant increase in our EBITDA margin in the second half of the year and are confident that the operational efficiencies we have implemented, alongside a reduction in inflationary cost pressures, will drive a doubling of EBITDA in 2024 and provide a strong platform for profitable growth going forward."

At 1302 GMT, shares in Fevertree Drinks were up 0.49% at 1,017p.

Reporting by Josh White for Sharecast.com.