Fever-Tree warns over hit to 2022 as costs soar amid Ukraine conflict
16 March 2022, 08:14
The drinks mixer maker said it now expects underlying earnings of between £63m and £66m this year due to rising costs.
Drinks mixer firm Fever-Tree warned over 2022 earnings as it said the Ukraine conflict has “dramatically” pushed up commodity costs in recent weeks.
The group said it now expects underlying earnings of between £63 million and £66 million this year as the cost pressures add to already steep rises in inflation.
Fever-Tree had already issued an alert over the impact of inflation on 2022 earnings in January, before Russia’s invasion of Ukraine.
It comes despite hospitality getting back on track after Covid restrictions were lifted, with Fever-Tree forecasting revenues of up to £365 million and growth of between around 14% to 17% as it hopes for its first full year of trading through the on-trade channel in more than two years.
The company said: “Commodity prices have increased dramatically in recent weeks because of the terrible events unfolding in Ukraine, and this has created significant uncertainty in relation to input costs.”
The earnings warning came as it reported pre-tax profits rising to £55.6 million in 2021 from £51.6 million in 2020 as revenues jumped 23% to £311.1 million.
It has already seen pressure on its profit margin last year due to rising costs and disruption caused by global supply chain problems.
The company was hit by lorry driver shortages, soaring transatlantic freight charges and US storage costs.
It has been taking action to reduce the impact, ramping up local production on the East Coast of America, alongside a fully functioning West Coast production line, to help reduce shipping costs.
But this will offset only some of the ongoing cost pressures, according to the group.
Co-founder and chief executive Tim Warrillow said: “Whilst the tragic situation in Ukraine has resulted in significant uncertainty in relation to our input costs in the short term, the long-term global opportunity for Fever-Tree remains substantial and we are as confident as ever in the brand’s ability to capitalise on this.”
The 2021 results showed that revenues rose 15% in the UK, jumped a third higher in the US and were up 35% in the European business.
