Tonic maker Fevertree cuts profit forecast, shares plunge 30%
4:01 am Friday, July 15th, 2022
By Sinchita Mitra
(Reuters) -Tonic maker Fevertree Drinks lowered its annual profit forecast on Friday amid worsening cost pressures and industry-wide supply chain snags, sending shares down 30% on track for their biggest-ever one-day percentage loss.
Companies around the world have been battling a surge in prices and uncertainty over commodity supplies because of the Ukraine-Russia war and rising inflation.
Fevertree said it expected full-year operating profit to be in the range of 37.5 million pounds to 45 million pounds ($44.33 million – $53.19 million), well down from its earlier forecast of between 63 million pounds and 66 million pounds.
The London-based company said demand from U.S. consumers remains strong, but labour shortages affecting East Coast production meant it had to ramp up U.K. output and ship drinks across the Atlantic at a time of elevated sea freight rates.
Inventory shortages in the United States continue to impact sales, Fevertree said, as it also warned of an expected double-digit increase in glass prices in the second half of the year amid restricted supply.
“We hoped that local bottling partnerships in the U.S. would start to ease inventory pressures, but labour shortages have scuppered those plans, at least for now,” said Matt Britzman, an analyst at brokerage Hargreaves Lansdown.
“Aside from soaring costs, Fevertree hasn’t been able to fully service the demand that clearly exists,” he added.
Global supply bottlenecks at ports and warehouses, partly the result of surging consumer demand, have pushed up shipping prices, delayed orders and increased costs for companies across industries.
($1 = 0.8460 pounds)
(Reporting by Sinchita Mitra in Bengaluru; Editing by Amy Caren Daniel and Jamie Freed)
