Food and drink ingredient maker Treatt (TET) has turned in a strong transition year as it adjusts to a lower orange oil price. The dividend is up while an increase in capital expenditure reflects efforts to broaden the company’s non-citrus revenue streams. The orange oil price is in a lull below $5 (£3.90) a kilogram after staying above $10/kg for most of 2017 following a poor 2016 harvest, although supply levels are now keeping a lid on prices.
Treatt’s revenue was down 2 per cent on a constant-currency basis year on year to £112.7m. As expected, the citrus division (54 per cent of group sales) was the main drag, with revenue down 10 per cent on the year before to £60.8m. The second-largest contributor to group sales was the aroma and high impact chemicals division, which saw 16 per cent growth to £21.5m.
As Treatt has put cash into broadening its business, the net operating margin fell from 12.4 per cent (also the 2017 figure) to 12 per cent. Chief executive Daemmon Reeve said the company had now “successfully decoupled” its financial performance from shifts in key citrus prices. Mr Reeve said its US expansion would bear fruit in the next year.
Consensus forecasts compiled by Bloomberg have Treatt’s cash profits rising from £14.6m in 2019 to £16.7m in FY2020.
| TREATT (TET) | ||||
| ORD PRICE: | 438p | MARKET VALUE: | £258m | |
| TOUCH: | 426-439p | 12-MONTH HIGH: | 495p | LOW: 383p |
| DIVIDEND YIELD: | 1.3% | PE RATIO: | 29 | |
| NET ASSET VALUE: | 148p | NET CASH: | £16.0m | |
| Year to Sept 30 | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2015 | 86 | 7.8 | 11.6 | 4.04 |
| 2016 | 88 | 8.8 | 11.9 | 4.35 |
| 2017 | 101 | 11.7 | 18.3 | 4.80 |
| 2018 | 112 | 11.5 | 21.6 | 5.10 |
| 2019 | 113 | 12.5 | 16.7 | 5.50 |
| % change | +1 | +9 | -23 | +8 |
| Ex-div: | 6 Feb | |||
| Payment: | 19 Mar |
