No treat, no trick, no Trump: Treatt stock hammered as revenue and profits fall

Treatt, based in Bury St Edmunds, makes and supplies a diverse and sustainable portfolio of natural extracts and ingredients for the beverage, flavour and fragrance industries. Macro-economic issues hit the normally sure-footed business to produce a first-half horror show.

Revenue of £64.2 million was down 11 per cent from £72.1m in the first half of 2024 and adjusted EBITDA is expected to be around £6.6m (H124: £10.6m). Profit before tax and exceptionals (PBTE) is expected to be c£3.6m – more than half the £7.6m in the same period the previous year.

Treatt says that, while the order book and pipeline are robust, including some exciting new customer wins in Premium, it now expects full year PBTE to be between £16m and £18m – reflecting an ongoing softening of consumer confidence in North America, recent geopolitical uncertainty and sustained high citrus prices, resulting in lower customer demand.

Treatt today separately announced a £5m share buyback programme but if it was intended as a sweetener it swiftly turned sour.

The combined impact of several factors means the business now expects revenue of between £146m and £153m for the full year.

One of the problems is the US where the market dumped before Trump’s tariffs! Treatt conceded that consumer confidence in the US had softened, impacting demand for carbonated soft drinks and the overall beverage market in North America.

However, macro pressures including recent geopolitical uncertainty in the US, “have and are expected to continue to impact on our sales demand with a softening in the beverage market,” Treatt says.

But the company remains fairly bullish, adding: “Notwithstanding these trading challenges which we expect to moderate, we are encouraged by some exciting wins in Premium, including securing a large new customer in North America, and capitalising on the low and no sugar trend.

“Additionally in New Markets, we have a healthy pipeline of opportunities for H2 and are progressing distribution arrangements to expand our reach.”

In New Markets, the company says it is encouraged by growth in TreattZest™ and China. The Shanghai Innovation Centre is now leased and on track to open later this calendar year.

Treatt says: “We expect this to accelerate China growth through customer co-collaboration and we are also excited by a number of new customers and a growing pipeline in China following investment in the sales team.”

The company said it was monitoring “the situation around US trade tariffs” which it said remained fluid.

“We are following developments closely to better understand the extent to which Treatt will be affected, both directly and indirectly. However Treatt's diverse supply chain, including our significant manufacturing presence in the US and UK, gives us the flexibility to support our customers in diverse ways in different markets.”

The group ended the half year with net cash of £0.9m (FY24: Net debt £0.7m). It says it continues to focus on working capital management and expects further cash generation in H2.

Treatt CEO David Shannon is upbeat, especially about prospects in Asia. He says: “Treatt made meaningful strategic progression in the first half of the year. We focused on expanding our reach with customers and I am particularly pleased that our Shanghai innovation centre, which will be instrumental in accelerating growth in China, is on track to open later this year.

“Our new French sample laboratory opened in April which will provide faster more efficient customer co-collaboration. Efforts to expand reach in Asia are progressing well.

“We are winning with our technologies in line with global trends, including sugar reduction to broaden into high value categories. Our new website launches in May to support enhanced customer centricity.

“Whilst we are disappointed by the impact on profitability of predominantly short-term trading challenges, we are encouraged by our robust order book and sales pipeline, and expect to realise the benefit of self-help measures within the second half. We remain confident in the medium-term outlook underpinned by the strategic growth drivers for Treatt.”