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Fevertree profit jumps but supply snags hurt margins

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FILE PHOTO: Products from the drinks company Fever Tree are displayed in London
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(Reuters) -British tonic maker Fevertree Drinks reported higher half-year earnings on Wednesday, but warned rising shipping costs due to global supply chain disruptions were hurting profit margins.

The company, which sells premium tonics and drink mixers, said it benefited from strong sales in the United States during the six months to June 30.

The results come two months after the group raised its annual revenue forecast, betting on people stocking their fridges for the summer and soaring demand from bars and restaurants.

However, global supply bottlenecks at ports and warehouses, partly the result of surging consumer demand as nations emerged out of lockdowns, have pushed up shipping prices, delayed orders and increased costs for companies across industries.

A crippling shortage of truck drivers is also adding to the problem.

Fevertree said the supply snags will likely stretch into 2022.

The company has addressed the issues by increasing shipments to its key U.S. market, building local inventory and working with its UK logisitics partner to manage truck driver availability during peak periods, moves that have increased expenses, it said.

Many of Fevertree's UK peers across industries including major industrial firms and retailers like Ocado and Dunelm are also facing supply disruptions.

Fevertree said half-year revenue jumped 36% to 141.8 million pounds ($196 million), while core profit climbed 23% to 29.2 million pounds. Gross profit margin, the proportion of profits earned from sales, slumped to 44.1% from 46.8% a year earlier.

($1 = 0.7236 pounds)

(Reporting by Sachin Ravikumar in Bengaluru; Editing by Shounak Dasgupta)

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