HomeBusinessMARKET REPORT: Fevertree loses its fizz over cost pressure fears

MARKET REPORT: Fevertree loses its fizz over cost pressure fears

Posh tonic maker Fevertree lost some fizz after warning it faces serious cost pressures this year.

On a bumper day for drinks firms, with both Guinness-owner Diageo and Robinson’s maker Britvic also reporting, Fevertree said rising costs would dent its profit margins.

The shares slumped 8.5 per cent, or 201p, to 2159p despite the group posting a 23 per cent increase in revenues for 2021 to just over £311million.

Flat: Fevertree said rising costs would dent its profit margins. Its shares slumped 8.5%, or 201p, to 2159p despite the group posting a 23% increase in revenues for 2021 to just over £311m

The update received a gloomy reception from analysts at broker Liberum, who downgraded Fevertree to ‘hold’ from ‘buy’ saying there would need to be ‘further evidence of a recovery in profitability’ to support the company’s value.

Meanwhile, Diageo gained 2.5 per cent, or 91p, to 3735.5p after posting a 22.5 per cent rise in profit to £2.7billion for the six months to the end of December. Sales rose 15.8 per cent to £8billion.

While the group had seen costs rise, this had been ‘more than offset’ by price increases and savings in its supply chain.

Richard Hunter, head of markets at Interactive Investor, noted that Diageo’s move towards the ‘premiumisation’ of its brands by emphasising their quality and exclusivity was providing the business with ‘additional insurance’.

Stock Watch – Air Partner

Air Partner, a provider of private jet charter and maintenance services, soared after a takeover bid by a US rival.

New York-based Wheels Up is offering 125p in cash for each Air Partner share, a 54 per cent premium to its last closing price before the offer was announced. 

The bid values the company at £84.8million. 

Air Partner’s directors are planning to unanimously recommend the offer to investors.

The shares rocketed 51.9 per cent, or 42p, to 123p, just shy of the offer price.  

Britvic also bubbled up 2.5 per cent, or 22p, to 887.5pp after sales in the three months to the end of December rose 16.5 per cent to £373.9million.

The easing of lockdown restrictions saw sales recover in October in November.

However, the firm noted that trading was dented in December as the rise in Omicron infections and the introduction of ‘Plan B’ measures caused a drop in out-of-home socialising among consumers.

The FTSE 100 rose 1.1 per cent, or 84.53 points, to 7554.31 while the FTSE 250 dipped 0.08 per cent, or 18.51 points, to 21854.57. 

Concerns that the US Federal Reserve could aggressively hike interest rates from March took a lot of wind out of the market’s sales. 

However, the prospect of higher interest rates did provide a boost for the blue-chip banking stocks.

Standard Chartered led the FTSE 100 higher, gaining 4.2 per cent, or 22.2p, to 546.2p, followed closely by HSBC (up 3 per cent, or 15.6p, at 538.3p) and Natwest which rose 0.7 per cent, or 1.6p, to 245.8p.

Other defensive stocks were also in demand, with tobacco giant BAT inching up 0.9 per cent, or 28p, to 3180p while rival Imperial Brands added 1.1 per cent, or 18.5p, to 1762p.

Investment manager M&G snapped up a controlling stake in Zurich-based firm ResponsAbility Investments for an undisclosed sum. 

M&G has bought a 90 per cent stake in the business and expects to buy the remaining 10 per cent in due course. The company’s shares fell 0.3 per cent, or 0.6p, to 213.9p.

Stock trading platform IG Group reported a record set of results for the six months to the end of November, with profits rising 8 per cent to £245.2million as new traders continued to enter the market amid ongoing volatility. 

Active clients increased by 42 per cent to 320,400 during the period, although the rise was slower than the same period a year ago. The shares jumped 2.9 per cent, or 23.5p, to 845.5p.

Vet group CVS bounded up 1.9 per cent, or 36p, to 1904p as the ongoing pandemic pet boom helped push revenues 11.4 per cent higher to £273.7million in the six months to the end of December. 

The firm flagged ‘strong’ ongoing demand for vet services into the new year amid higher levels of ownership and the ‘humanisation’ of pets, and as a result, trading was ‘comfortably in line’ with its expectations.

PPHE, the owner of hotels, campsites and resorts, inched up 5 per cent, or 70p, to 1470p as it flagged strong demand and predicted a ‘rapid uplift’ in customers once pandemic restrictions were removed. 

It also posted a 32.7 per cent jump in revenues to £84.4million in 2021, nearly 34 per cent higher than the same period in 2019.

Some links in this article may be affiliate links. If you click on them we may earn a small commission. That helps us fund This Is Money, and keep it free to use. We do not write articles to promote products. We do not allow any commercial relationship to affect our editorial independence.

Source link

Must Read