Treatt Warns of Lower Profits as Demand Softens
Why we think this is bad
The trading update from Treatt plc indicates that the company is facing several challenges that will impact its profitability for the full year. The key factors include: - Lower demand in the Heritage business due to sustained high citrus prices, leading to customer reformulation and a decline in value-added citrus volumes. This trend is expected to continue for the remainder of the year. - Softer consumer confidence in the US, impacting demand for carbonated soft drinks and the overall beverage market in North America. Macro pressures, including recent geopolitical uncertainty, have and are expected to continue to affect sales demand. As a result, the company now expects full year PBTE to be between £16m and £18m, which is below previous guidance. This is a clear negative signal for the company's performance and outlook.
Key Points
- Revenue declined 11% to £64.2m
- Adjusted EBITDA expected at c£6.6m
- PBTE expected at c£3.6m
- Net cash position of £0.9m
- Full year PBTE expected between £16m and £18m, below previous guidance
Summary
Treatt plc, the manufacturer and supplier of natural extracts and ingredients, has issued a trading update for the half year ended 31 March 2025. The company reported a 11% decline in revenue to £64.2m and expects adjusted EBITDA of around £6.6m and PBTE of around £3.6m.
The key highlights are:
- Revenue decline of 11% (10% in constant currency) due to lower volumes in both Heritage and Premium categories
- Adjusted EBITDA expected to be c£6.6m (H124: £10.6m)
- PBTE expected to be c£3.6m (H124: £7.6m)
- Net cash position of £0.9m (FY24: Net debt £0.7m)
The company now expects full year PBTE to be between £16m and £18m, which is below previous guidance. This is due to lower demand in Heritage from sustained high citrus prices, softer consumer confidence in the US, and recent geopolitical uncertainty impacting the beverage market.