Fever-Tree is set to post an increase in annual profits this week after the mixer-maker benefited from last summer’s heatwave and bumper Christmas trading.
City analysts expect it to report a 32 per cent increase in earnings to £77.5 million for 2018, ahead of expectations.
Sales are also set to jump 39 per cent to £236m following what Fever-Tree has previously described as an “outstanding” summer and strong Christmas. In the UK, its fastest-growing market, sales were up 52 per cent last year and the US saw 21 per cent growth. However, both profit and sales growth are set to have slowed markedly from 2017, when they jumped by more than 60 per cent.
Sophie Lund-Yates, equity analyst at Hargreaves Lansdown, said: “We think operating margins will be under pressure, as the UK sugar tax will have impacted profitability in the second half of the year. At the same time, increased investment in the USA is probably diluting margins too.”
Fever-Tree, which specialises in selling mixers such as ginger beer, is hoping to replicate the group’s UK success in the US.
Broker Jefferies expects Fever-Tree’s growth rates seen in the UK to normalise over the coming years. It has also calculated that a 5 per cent deceleration in the UK requires 20 per cent acceleration in the US to maintain group growth.