Bury St Edmunds ingredients manufacturer, Treatt, downgrades profit expectations amid uncertainty in the US market

An ingredients manufacturer has downgraded profit expectations amid uncertainty in the US market.

But Treatt, based in Suffolk Park, Bury St Edmunds, says it remains confident for the medium-term outlook.

In its a trading update for the half year ended March 31, the company says revenue fell 11 per cent to £64.2 million, down from £72.1m, with adjusted earnings dropping from 10.6m to £6.6 million.

It now expects revenue of between £146m and £153m for the full year, and profit before tax and exceptionals between £16m and £18m, down from £21 million last year.

Treatt, which manufacturers and supplies a range of natural extracts and ingredients for the beverage, flavour and fragrance industries, says sales of citrus-based ingredients, a core product, were hit by high fruit prices, leading customers to either reformulate or delay purchases.

It added consumer confidence in the US has also softened, impacting demand for carbonated soft drinks and the overall beverage market in North America.

The company says recent geopolitical uncertainty in the US, have, and are expected to continue to impact sales.

It highlighted recent wins in higher-margin premium categories, however and announced a £5 million share buyback, reflecting confidence in the future.

David Shannon, CEO, said: “Treatt made meaningful strategic progression in the first half of the year.

“We focussed on expanding our reach with customers and I am particularly pleased that our Shanghai innovation centre, which will be instrumental in accelerating growth in China, is on track to open later this year.

“Our new French sample laboratory opened in April which will provide faster more efficient customer co-collaboration. Efforts to expand reach in Asia are progressing well. We are winning with our technologies in line with global trends, including sugar reduction to broaden into high value categories. Our new website launches in May to support enhanced customer centricity.

“Whilst we are disappointed by the impact on profitability of predominantly short-term trading challenges, we are encouraged by our robust order book and sales pipeline, and expect to realise the benefit of self-help measures within the second half.

“We remain confident in the medium-term outlook underpinned by the strategic growth drivers for Treatt.”