Treatt (TET) has been operating in a lower price environment for over a year, so the current uncertainty is nothing new to the Suffolk-based producer of specialist additives and fragrances for the food, drink and consumer products industries. 'Away-from-home’ demand for its customers' drinks are down to almost zero, but an intensified focus on the cleaning products market and stabilising citrus raw material prices augur well for the second half.
The company says its sales and operations have not yet been hurt by Covid-19, and it has stuck to its dividend policy, with the half-year payout to shareholders being a third of the previous year’s total dividend.
Chief executive Daemmon Reeve said the state of the order book and still intact supply chains meant the board was confident of fulfilling dividend commitments. This payout is off the back of a six-month period where revenue fell because of weak orange oil prices. But these prices are now coming up from $4 per kilogramme (kg) last year to $5.50-$6.50/kg, Mr Reeve said. The citrus division, which provides half of Treatt’s revenue, saw a 15 per cent drop in sales in the period, even with volumes up 20 per cent. The segment's operating profit and corresponding margin were flat on the first half of 2019.
| TREATT (TET) | ||||
| ORD PRICE: | 506p | MARKET VALUE: | £301m | |
| TOUCH: | 494-510p | 12-MONTH HIGH: | 550p | LOW: 310p |
| DIVIDEND YIELD: | 1.1% | PE RATIO: | 32 | |
| NET ASSET VALUE: | 149p | NET CASH: | £6.1m* | |
| Half-year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2019 | 56.6 | 5.93 | 8.01 | 1.70 |
| 2020 | 53.6 | 5.58 | 7.33 | 1.84 |
| % change | -5 | -6 | -8 | +8 |
| Ex-div: | 2 Jul | |||
| Payment: | 13 Aug | |||
| *Includes lease liabilities of £0.4m | ||||
