Treatt LON:TET the Suffolk-based, FTSE250 listed manufacturer of flavour and fragrance ingredients used in beverages, food, personal care, and pharmaceuticals will publish its end of year results next Tuesday (28th November).
The company’s stated aim is to make the world taste better, and it has been doing so since essential oil merchant, Richard Treatt, established the company in 1886. Richard Treatt started off extracting and blending natural ingredients mainly for the beverages industry and then expanded into fragrances, developing new essences through several manufacturing plants globally.
- Burberry bid: Any substance to ongoing takeover rumours?
- Share tip: a British engineering company that flies under the radar
- SulNOx volumes up 400%, secures £1.8m for expansion
But could Treatt be ready to bounce-back in 2024? Its half-year results to the end of March were pointing the way as it delivered record first-half revenues, especially in China and for coffee, as it got a handle on raw materials inflation and its own costs. The ingredients manufacturer followed this up with the statement that it was back on course for full-year profit growth in a trading update to the end of September.
The company managed to increase revenues by 5% to GBP147m in the twelve months to end-September, while pre-tax profits was seen in line with expectations at approximately GBP17m, an 11% year-on-year jump. The company also managed to shave its debt from GBP22.4m to GBP10.5m year-on-year which reflected Treatt’s strong cash generation during the year. Treatt declared a dividend of a 2.55p/share at the end of March, up 2% year-on-year.
Market conditions have moved against Treatt
In many ways market conditions have moved against Treatt. Its valuation peaked at 731p in May and then dropped off a cliff. Over the year-to-date share price Treatt has fallen -25.4% and over one-year fell -33.8%.
However, as inflation raised concerns – especially in the food sector – the market moved against Treatt, looking at its valuation as too high.
Industry destocking post-Coronavirus is coming to the end of its cycle. Treatt has shown its resilience, however the departure of its chief executive, Daemmon Reeve into retirement after 32-years at the company may affect stability.
AI data analysis from Bridgewise rates Treatt as ‘Hold’. Backing up the market’s current view of Treatt Bridgewise said: “Looking at Treatt’s financials of 1Q23 reflected unimpressive, mediocre results. It is highly likely that the company will be mostly tethered to market performance and sector movements for the near term. Therefore, they earned a total score of 73 out of 100 and a ‘Hold’ recommendation.”
- Stock recommendations by Bridgewise. Try a free trial of Data+ for a deeper look.