Premium Mixer Company Fevertree Drinks PLC reports significant profitability improvements in 2024 as US revenue growth and margin improvements increase bottom line profits.
Once a beloved British small investors, Fevertree suffered during a period of slower sales decline.
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Today’s 7% stock jump suggests investors are mildly optimistic.
The London-listed company saw the growth in Heat and Tree brand revenues accelerated to 7% in the second half of the year, bringing full-year growth of 4% on a constant currency basis.
This was driven primarily by the company’s performance in the US, with revenues increasing by 12%.
Fevertree reported a significant 540 basis points improvement in total margin that contributed to a 66% increase in adjusted EBITDA to £50.7 million in line with market expectations. The company’s EBITDA margin increased by 530 basis points to 13.7%.
This is all welcome news for investors.
The company’s strong financial performance allows us to recommend a final dividend of 11.12p per share, representing a 2% increase from the previous year.
Additionally, investors are pleased that Fevertree will extend its stock buyback program by an additional £29 million and return it to shareholders from fiscal year 2023.
US Growth
It’s not easy to crack America, but despite the UK issues, Fevertree has been successful in establishing a strong presence and is currently the group’s single largest geography in terms of revenue.
However, in a strategic change in its approach to the US, Fevertree announced its significant year-end development in a long-term strategic partnership with Drinks Giant Molson Coors on January 30, 2025, in its long-term strategic partnership with Drinks Giant Molson Coors, with exclusive sales, distribution and production rights for the US Fever-Tree brand.
The partnership aims to leverage Molson Coors’ size and expertise to accelerate heat and tree growth in the US market, taking advantage of opportunities in both alcoholic and non-alcoholic categories.
“In return for handing over stocks in the business, Fevertree accesses Coors’ wide range of production, distribution and marketing resources,” explains Aarin Chiekrie, equity analyst at Hargreaves Lansdown.
“We hope this will help drive the next growth foot in the US. This has already become the biggest market for tonic manufacturers.”
Fevertree has admitted £500,000 for exceptional items related to the transition to this partnership during the reporting period.
Fevertree’s outlook
Following the announcement of its strategic partnership with Molson Coors, Fevertree expects strong group revenue and EBITDA growth over the medium term. However, the company warns that FY25 will be a transition year for US businesses.
Fevertree reaffirmed its guidance and said it was satisfied with its consensus expectations for single-digit group revenue growth next year and about 12% group adjustment EBITDA margin.
Investors appear to be happy with the update, with the stock trading at the highest level early trading since October 2024.
