- The beverage manufacturer anticipates returning up to £100m to shareholders in 2025
Fevertree Drinks Boosts Share Buyback After Profit Surge
Fevertree Drinks is increasing its share repurchase program by an additional £29 million following a slight outperformance of core profit expectations last year.
The premium mixer company now projects returning as much as £100 million to its shareholders in 2025. This revised figure follows an initial announcement in February of a £71 million share buyback.
Financial Performance Exceeds Expectations
The drinks firm reported adjusted earnings before tax and other charges climbed by two-thirds to £50.7 million in 2024. This figure marginally surpassed analyst forecasts of £50.6 million, primarily driven by reduced expenses in glass materials and transatlantic shipping costs.
However, revenue experienced a modest rise of 1 percent, reaching £364 million. This subdued growth reflects ongoing cautious consumer sentiment across the UK and Europe amidst persistent inflationary pressures.
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Regional Sales Performance
UK Market Faces Headwinds
Fever-Tree’s UK revenues witnessed a decline of 3 percent to £111.1 million. This contraction was mainly attributed to decreased demand from hospitality sectors and a downturn in the gin market.
US Market Demonstrates Robust Growth
Conversely, US sales demonstrated significant growth, surging by 9 percent to £128 million. This expansion was supported by the company’s successful efforts to broaden its retail customer base and strengthen its market leadership in both tonic and ginger beer categories.
Positive trading momentum was also observed in Canada and Australia. The Australian market benefited from successful introductions of new products, including 250ml cans of soda and ginger beer, as well as cocktail mixers in prominent liquor store chains.
Executive Commentary and Future Outlook
Tim Warrillow, co-founder and chief executive of Fever-Tree, noted the brand’s strong performance in 2024, despite a hesitant consumer environment.
“Across all key regions, we are expanding our market share as more consumers discover, enjoy, and develop loyalty to Fever-Tree for an increasing range of occasions,” Warrillow stated.
Building on these results, Fever-Tree is recommending a final dividend of 11.2 pence per share, representing a 2 percent increase year-over-year.
The company expressed confidence in achieving low single-digit revenue growth and an adjusted earnings margin of approximately 12 percent in 2025. This outlook considers the US business being in a transitional phase.
Strategic Partnership with Molson Coors
In January, Fever-Tree entered into a strategic alliance with brewing giant Molson Coors to facilitate its US expansion, a market it has been active in since 2008.
The agreement involved Molson Coors acquiring an 8.5 percent stake in Fever-Tree. In exchange, Molson Coors secured exclusive rights for the sales, distribution, and production of Fever-Tree products within the United States.
Warrillow described the partnership as a “transformational step” for the company, highlighting its significance for future growth.
Analyst Perspective
Aarin Chiekrie, equity analyst at Hargreaves Lansdown, commented on Fever-Tree’s strategic direction, stating: “Increased marketing expenditure is planned to significantly enhance brand recognition and boost sales.”
Chiekrie added, “While this is a prudent strategy, it is expected to exert pressure on near-term profitability. Fortunately, a robust net cash position provides sufficient funding for these initiatives, ensuring dividend payments remain secure for the foreseeable future.”
Stock Market Reaction
Fever-Tree Drinks shares experienced a rise of 5.2 percent to 784p in early Tuesday trading. However, it’s noted that the stock has still decreased by roughly a quarter over the preceding year.