Fever-Tree shares sink as sales growth loses fizz

23 July 2019, 09:42 | Updated: 23 July 2019, 20:11

Shares in mixer maker Fever-Tree have fallen sharply after gloomy UK weather in the first half of the year took the fizz out of its sales growth.

Revenues in its biggest market rose by just 5% in the first six months of the year, compared with 73% first-half growth a year ago.

However, booming global markets - including the US - lifted the group's overall sales by 13% to £117.3m.

Shares were 9.6% lower by the close of trading.

Fever-Tree said it had expected to see some slowing in the UK after "several years of exceptional growth".

"In addition, as has been widely reported across many sectors, the poor weather in the past quarter has had a dampening effect on growth rates," the company added.

The results, for the six months to the end of June, cover a period before the current heatwave.

Other soft drinks firms, including Irn Bru maker AG Barr - which issued a profit warning last week - have also blamed a wet spring and overcast start to summer for putting pressure on their businesses.

Despite the slowdown, Fever-Tree chief executive Tim Warrillow said the drinks business has still been able to strengthen its market position.

As the company branches out from its flagship upmarket tonic waters to a range of other mixers, Fever-Tree said it was "very well positioned" for further growth in the UK.

Mr Warrillow said: "It has been an encouraging first half for the group, with growth across all our four regions, most notably in the US, where we have made significant distribution gains and operational progress..."

He added: "While we have not been immune to the impact of the unseasonably poor weather in the UK we have further strengthened our market leadership position within the UK and have seen positive momentum in Europe and the rest of the world, reflecting our increasingly global footprint."

Pre-tax profits for the period rose 7% to £35m and the firm said its profit outlook for the year remained unchanged.

Sales in the US lifted the company's results, with revenue there spiking by 31% to £19.8m.

Russ Mould, investment director at AJ Bell, said: "Ultimately Fever-Tree has become a victim of its own success.

"Soaring growth rates in recent years have raised expectations for its performance and failure to deliver anything but superior rates leaves it open to fierce criticism.

"Yet the latest set of results still show a business that continues to grow earnings and make progress with geographic expansion, which has to be applauded."