Fever-Tree Drinks PLC has released its FY23 interim results, reporting a 9% year-on-year revenue growth. The company experienced strong performance in the US, with a 40% growth, making it the Group's largest region by revenue contribution. Fever-Tree also achieved its highest ever market share by value in the UK. However, there was a 670 basis points reduction in gross margin due to product cost headwinds, partially offset by efficiency projects. The adjusted EBITDA margin was 5.8%, reflecting the lower gross margin and phasing of overheads. The company expects to drive an improvement in the second half of the year. Fever-Tree also reported an exceptional item of £3.3 million relating to a production issue in the US, which did not impact customer relationships or the ability to supply the market. The company is recommending an interim dividend of 5.74 pence per share, an increase of 2% year-on-year.
In terms of strategic highlights, Fever-Tree experienced very strong revenue growth in the US across all categories, extending its leadership position in Tonic Water and Ginger Beer. The company also extended its market leadership in the UK with its highest ever value share and saw encouraging initial performance from its range of cocktail mixers and adult soft drinks. Fever-Tree's European markets performed well, growing its leadership position to two-thirds of the premium mixer category across the region. The first-half revenue for the ROW region reflects a one-off inventory buy-back as part of the transition to a new subsidiary set-up in Australia.
Looking ahead, Fever-Tree expects continued good growth in FY23, particularly in the US. However, the company's sales performance since the period-end has been impacted by unseasonably poor weather in the UK, which subdued the wider category over the key summer trading period. As a result, Fever-Tree now expects FY23 revenue of between £380 million to £390 million. The company is making progress with the mitigation of inflationary cost challenges and reiterates its gross margin guidance of 31% to 33% for FY23. Fever-Tree expects overheads to be in the range of £88 million to £92 million, resulting in FY23 EBITDA guidance range of approximately £30 million to £36 million.
Looking ahead to 2024, Fever-Tree is confident of delivering significant margin improvement due to softening inflationary headwinds and the benefit of actions taken in 2023. The company expects to deliver an improved FY24 EBITDA margin of approximately 15%, which is ahead of current market expectations. CEO Tim Warrillow commented on the results, stating, "Fever-Tree delivered good revenue growth in the first half of 2023. We had a standout performance in the US where the brand continues to go from strength to strength, extending our leadership position in the Tonic and Ginger Beer categories."