Treatt bets on China and premium products after slow start to the year
Ingredient manufacturer Treatt expects oncoming demand from China and sales from its premium unit to help offset a revenue slump through the first half of 2024.
Revenue for the half year declined by 5.1 per cent to £72.1m, as previously forecast by the group, owing to a historical trend for quiet first quarters of the year.
Sales correspondingly grew 5.1 per cent through the second quarter of the year as de-stocking softened, as expected and the group said it posted its highest-ever monthly revenue in March.
Sustained high prices for certain raw ingredients, such as orange oil, suppressed the group’s heritage sales by around six per cent, but synthetic aroma sales, which also sit within the heritage unit, were up 3.9 per cent.
Treatt’s higher margin premium categories grew 11.6 per cent through the period, driven by what the group described as “multiple wins” in the tea category in the North American market, a trend that the group expects to continue through the second half of the year.
China proved a fruitful market for the company’s portfolio of leading local beverage brands, growing 3.3 per cent through the first six months of the year, built off a broader base of local manufacturing partners.
The group’s net debt ticked down slightly from the 2023 year-end figure of £10.4m to £10.3m, and inventory volume rose by 5.6 per cent since September last year.
Interim chief executive Ryan Govender said that the group’s first-half performance was “robust” and that its strategy was progressing well.
“We are particularly pleased with progress in China, where we continued to invest and consolidate our position, and in our higher margin premium categories where we have a number of active pipeline opportunities,” he said, adding that momentum in the second quarter was strong.
“As we enter the second half, we are encouraged by our solid order book and healthy sales pipeline. The Board continues to expect to report full-year PBTE in line with expectations,” he said.
Govender took the interim chief executive role in January following the resignation of Treatt’s former head, Daemmon Reeves.