Fever-Tree Drinks PLC has released its FY23 interim results, reporting a 9% year-on-year revenue growth. The standout performance was in the US, with a 40% growth, making it the company'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 strong revenue growth in the US across all categories, extending its leadership position in Tonic Water and Ginger Beer. In the UK, the company achieved its highest ever value share and saw encouraging initial performance from its range of cocktail mixers and adult soft drinks. Fever-Tree also performed well in many of its European markets, growing its leadership position to two-thirds of the premium mixer category across the region. The first-half revenue for the Rest of World region reflects a one-off inventory buy-back as part of the transition to a new subsidiary set-up in Australia. The company made good progress on key operational initiatives and expects significant year-on-year margin recovery in 2024.
Looking ahead, Fever-Tree expects continued good growth in FY23, particularly in the US. However, the 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, the company now expects FY23 revenue of between £380 million to £390 million. Fever-Tree is confident in delivering significant margin improvement in 2024, setting up the group for strong, profitable growth. The company expects an improved FY24 EBITDA margin of around 15%, ahead of current market expectations. CEO Tim Warrillow commented that Fever-Tree is well-positioned for strong, profitable growth going forward, with a stronger global market position, a broader product portfolio, and confidence in delivering margin improvement.