Fevertree’s full-year revenue grew to £368.5mn (£367.9mn expected), up 3%, ignoring exchange rate impacts. This was driven by double-digit growth in the US and the Rest of the World, which helped to offset declines in the UK.
Underlying cash profits (EBITDA) rose 66% to £50.7mn, driven by lower glass and freight costs.
Free cash flow improved from an outflow of £6.4mn to an inflow of £66.9mn due to its improved profitability. Net cash improved 60% to £96.0mn at year-end.
The 2025 outlook has been reiterated, with revenue expected to grow at a low single-digit rate. Underlying cash profit margins are expected to be around 12%.
A final dividend of 11.12p per share has been announced, taking the full-year total to 16.97p, up 2%. The current share buyback programme has been extended by £29.0mn, resulting in up to £100.0mn of shareholder returns over 2025.
The shares rose 5.0% in early trading.
Our view
Fevertree’s full-year results were largely as expected, with profits rebounding sharply as glass and freight costs normalised. But profitability this year is likely to come under pressure as the group’s set to significantly ramp up its marketing spend to fuel the next leg of growth in the US.
Fevertree’s progress in the US to date has been impressive, becoming the number one brand in both the tonic and ginger beer categories. This market has already grown to become the group’s largest region by sales. But given the vast size of the US, there’s still a lot of room for growth.
That’s why Fevertree recently teamed up with Molson Coors, one of the world’s largest beverage companies, to help get its drinks into the hands of more customers. Fevertree handed over equity in the business, and in return, it’s getting access to Coors’ broad US production, distribution and customer network. Having the second-largest US brewer on your side is no bad thing.
Fevertree continues to expand its drinks portfolio with new products, and non-tonic mixers have grown to around 45% of total sales. These new offerings open the door to different types of drinkers, drastically increasing the number of customers it has to go after.
But there are some challenges to be wary of.
UK sales continue to trend in the wrong direction. It turns out there is a cap on how much premium tonic you can sell, and it looks like Fevertree has reached it in its home market. Successful international expansion will be critical to continued growth.
While we’re positive on the long-term outlook for the Coors partnership, there’s a lot of work to be done to get it up and running. Operational creases will likely need to be ironed out as Coors takes over US production, so we wouldn't rule out disappointment on the profit front as the year progresses.
The balance sheet is in good shape thanks to low debt levels, and there’s currently a prospective 2.3% dividend yield on offer. The partnership may reduce demands on Fevertree’s cash over time, potentially clearing room for further shareholder returns. But as always, no shareholder returns are guaranteed.
The long-term outlook is better than it has been for some time. But even with the recently announced partnership, we see plenty of trip hazards in the near term. Potential investors should expect a bumpy ride.
Environmental, social and governance (ESG) risk
The food and beverage industry tends to be medium-risk in terms of ESG though some segments like agriculture, tobacco and spirits fall into the high-risk category. Product governance is a key risk industry-wide, especially in areas with strict quality and safety requirements. Labour relations and supply chain management are also industry-wide risks, with other issues varying by sub-sector.
According to Sustainalytics, Fevertree’s management of ESG risk is average.
The group doesn’t use plastic bottles but instead uses glass or cans from a portion of recycled materials. As such, the group’s products are completely recyclable, however, they are energy-intensive to mould and make. Fevertree also claims its range of mixers sold in the UK are carbon neutral. However, no concrete scope emission reduction targets appear to be in place.
Fevertree key facts
All ratios are sourced from LSEG Datastream, based on previous day’s closing values. Please remember yields are variable and not a reliable indicator of future income. Keep in mind key figures shouldn’t be looked at on their own – it’s important to understand the big picture.
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