Fevertree Drinks (FEVR) H1 2024 earnings summary

Executive summary

• Achieved robust performance in H1 2024, with nearly 80% EBITDA growth and strong margin recovery, gaining market share across all key regions despite challenging macroeconomic and consumer conditions.

• Continued investment in marketing, innovation, and portfolio expansion, with non-tonic products now representing over 40% of Group sales and new categories such as cocktail mixers and adult soft drinks.

• Strategic focus on premiumisation, global expansion, and marketing, with the US now the largest revenue region and continued leadership in the UK and Europe.

• ESG and sustainability initiatives advanced, including a net zero roadmap, enhanced human rights charter, 100% renewable energy in offices, and expanded community and conservation programs.

• Strong post-period summer trading, with July and August Fever-Tree brand growth of 13%.

Financial highlights

• Group revenue was £172.9m (down 2% year-on-year); Fever-Tree brand revenue was £170.6m (up 2% at constant currency).

• Gross margin improved by 520 basis points to 35.9%, with gross profit up 15% to £62.0m.

• Adjusted EBITDA rose 79% to £18.2m, with a margin of 10.5% (+470bps), and strong operating cash flow conversion of 140%.

• Diluted EPS increased to 6.49p (+590%), and interim dividend rose 2% to 5.85p per share.

• Cash at period end was £65.9m, with net cash flow of £6.0m and inventory levels reduced.

Outlook and guidance

• H2 reported growth for the brand expected in the range of 7%-10%, with full-year reported growth of 4%-5% (6%-7% constant currency).

• On track to deliver ~600 basis points of gross margin improvement in 2024 and targeting further gains in 2025.

• Continued investment in brand and innovation, with ~£90m overhead spend planned for the year.

• Plans to return surplus/excess cash to shareholders in 2025.

• Confident in medium-term margin recovery, supported by normalization of inflationary pressures and operational efficiencies.