SUFFOLK-based flavour and fragrance ingredients company Treatt yesterday reported strong first half sales but warned that margins were coming under pressure.
SUFFOLK-based flavour and fragrance ingredients company Treatt yesterday reported strong first half sales but warned that margins were coming under pressure.
The Bury St Edmunds firm said group revenue for the six months to March 31 had totalled £21.662million, up 13% on last year's first half, despite a quiet first quarter.
However, gross margins were lower than last year, resulting in pre-tax profit for the period falling by 8% compared with the first six months of last year to £1.317million.
Treat said that its American business, Treatt USA, had reversed last year's “disappointing” results and was now “exceeding expectations”, with sales up 31% compared with last year's first half - reflecting new business in citrus oils and strong growth in its Treattarome range of natural distillates - and profits having more than doubled.
R C Treatt, the group's UK operating subsidiary, also had a good first six months, the group said, with sales up by 9% despite weakness in the US dollar continuing to exert “significant downward pressure” on margins. Orange product sales were up 60%, as a result of last year's investment in additional capacity, it added.
Half-year losses from the group's Earthoil 50:50 joint venture, launched in February last year, increased from £23,000 to £232,000.
However, Treatt said that since the end of March it had acquired the 50% of the business it did not previously own in order to take full control and ensure that Earthoil achieved its potential.
Treatt chairman Edward Dawnay said yesterday: “Both R C Treatt and Treatt USA performed well in the first half and, with group order books up by more than 60% year on year, we expect this to continue for the remainder of the year.”
A gradual improvement in results from Earthoil was also expected during the second half, said Mr Dawnay.
And he added: “We believe that the potential for further growth in both Treattarome and traditional citrus oil sales is still good, although the world shortage of lemons will have unpredictable effects on the group's results over the next 12 to 18 months.”
The board has declared a 2.9% increase in the interim dividend to 3.6p per share, up from 3.5pps at last year's half-way stage.
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