Fevertree shares slump 21% after subdued UK christmas sales
, said in a trading update on Monday that revenues for 2019 would be below expectations as a result of subdued Christmas trading in the UK.
The premium carbonated mixers supplier told investors that it expects 2019 revenues to be £260.5 million, representing a 9.7% growth rate from 2018.
Revenues from the UK fell 1%, while the US, Rest of the World and Europe revenues grew at 33%, 32% and 16% respectively. Fevertree still derives just over half of its sales from the UK.
The company said in a statement: “the wider retail environment in the UK experienced a challenging Christmas with the mixer category not immune from the weak consumer confidence and corresponding slowdown in spending”.
Fevertree also told investors that as a result of investing into its growth regions, margins for 2019 would be below expectations, and earnings would be c.5% lower than 2018.
Fevertree revised its outlook for next year, expecting gross margins of 49% and EBITDA margins of 28% as it invests into growth regions.
Shares fell 21.5% to £15.66 during Monday morning trading
The company’s market capitalisation fell £500 million from approximately £2.3 billion to £1.8 billion by lunchtime trading in London.
Tim Warrillow, CEO, said: "Whilst the UK mixer category has clearly not been immune from the consumer belt tightening seen in recent months, we remain the clear category leader and have a strong platform to return to growth during 2020 and beyond.”
“However this is a global opportunity which remains in its relative infancy in many markets. The trend towards premium spirits and premium long mixed drinks continues to gather momentum around the world.”
He said: “Fever-Tree is the no1 premium mixer globally and our performance in 2019 across US, Europe and as far afield as Australia and Canada highlights the fast-growing international strength of the business.”
“Our decision to increase our investment in these regions and in particular in the US reflects our belief and excitement in the long-term opportunity ahead for the Group."
Fevertree revealed that as a result of some trials and initiatives with key customers in the US, it expects a one-off impact on net revenue growth in 2020 for the region.
It revised its US growth forecasts to be in the low double digits for the year, before it unlocks the potential of the US market in the medium to long term.
The company kept its European and Rest of World growth forecasts unchanged, and said it was confident the UK region will return to growth in 2020.
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