Treatt Plc Reports Annual Revenue Increases 13.4%
2009 has been a strong year for the Group, especially given the very difficult economic environment. Group revenue continued to grow with an increase for the year of 13.4% to £56.31m (2008: £49.64m).
8 Dec 2009 --- Treatt Plc, the manufacturer and supplier of conventional, organic and fair trade ingredients for the flavour, fragrance and cosmetic industries, announces its preliminary results for the year ended 30 September 2009.
2009 has been a strong year for the Group, especially given the very difficult economic environment. Group revenue continued to grow with an increase for the year of 13.4% to £56.31m (2008: £49.64m). Over the last two years, therefore, Group revenue has risen by 48%. Group earnings before interest, tax, depreciation and amortisation increased by 11.5% to £5.01m (2008: £4.50m) with profit before tax for the year up by 14.3% to £3.50m (2008: £3.06m). Basic earnings per share has increased by 26.3% to 24.5 pence (2008: 19.4 pence) and net assets per share have increased by 5.3% to 217.0 pence per share (2008: 206.1 pence per share).
During the year the Group had a strong positive cash flow, generating a total cash inflow of almost £7m and reducing total Group debt from £15.8m to £8.9m. As a result, the total gearing ratio has fallen from 73% to 39% and the debt/equity ratio has reduced from 70% to 31%. As confirmed in the Interim Statement, all Group bank facilities were renewed without difficulty.
The Board is therefore proposing a final dividend of 8.3 pence (2008: 7.6 pence), increasing the total dividend for the year by 7.1% to 12.0 pence (2008: 11.2 pence) per share. The final dividend will be payable on 5 March 2010 to all shareholders on the register at close of business on 29 January 2010. Group operating profit after foreign exchange translation differences increased by 9.5% to £3.9m (2008: £3.6m). As has been the case in previous economic downturns, the Group has performed well over the last year, with the Groups main UK operating business, R.C. Treatt, putting in a particularly strong result.
However, following a very strong 2008, Treatt USA had a much more difficult time in 2009 whilst the Groups organic and fair trade business, Earthoil, continued to improve markedly with sales growth of 42%. Overall the Group benefitted from the sharp strengthening of the US Dollar which occurred towards the end of the previous financial year and in the first quarter of this year, although as part of the Groups hedging policy it did suffer adverse foreign exchange translation differences totalling £0.45m in addition to the £0.60m experienced in the last quarter of the previous financial year. For further details of the Groups hedging policy see the Financial Review. Sales of orange oil products, which represent 17% of Group revenue (2008: 19%), decreased by 3% during the year (having grown by 54% the year before), whilst contribution from orange oil products fell by 19% following a 42% increase in 2008. However this should be seen in the context that orange oil fell during the financial year from close to US$2.50/Kg to little more than US$1.00/Kg although the market began to firm moderately once again in Q4 due to a reduced global orange crop and improving demand. In addition, the decline in the vast majority of other commodity prices during the year had a generally negative effect on Group margins, although this was offset to a considerable extent by the stronger US Dollar.
As already mentioned, R.C. Treatt continued to perform strongly with particularly healthy demand from its major customers and with strong export sales being maintained. Global aroma chemical sales were virtually unchanged following several years of double digit growth, whilst sales of manufactured citrus essential oils increased by 7%. Revenue at R.C. Treatt has increased by 6% to £38.9m (2008: £36.6m), with profits up by 22%. At the start of the financial year the US Dollar rate vs UK Sterling strengthened from $1.78 to almost $1.40 and then returned to end the year at $1.60. This resulted in the adverse foreign currency translation differences of £0.45m referred to above.
The absence of last years one-off gains on lemon oil sales and generally weaker demand in the US, resulted in a substantial decline in Treatt USAs profitability in 2009 with sales in US Dollars falling by 6%. On the positive side, with falling commodity prices, Treatt USA was able to significantly reduce its inventory levels and thereby generate a cash inflow of more than US$5m (£3.1m). The growth in TreattaromeTM sales continued with an increase, in US Dollars, of 14% (2008: 28%) across a wide range of products, with the extensive range of tea products doing particularly well.
Having taken full control of Earthoil in April 2008, these results reflect the first full year under 100% ownership. On a like-for-like basis, Earthoil revenues increased by 42% whilst the final stages of integrating Earthoils UK business with that of the Group was completed following the relocation of Earthoils vegetable oil operations from Lichfield to Bury St. Edmunds. The Earthoil organic and fair trade farming and production projects in India, Kenya and South Africa continue to progress well and the last year has seen Earthoil win substantial new business in organic and fair trade vegetable oils.
In summary, the Group continues to demonstrate its position as one of the leading, independent and truly global suppliers of ingredients (natural, organic, fair trade and aroma chemicals) for the flavour, fragrance and cosmetics industries. The Group also remains a world leader in agricultural food science and analysis and remains very well placed to leverage opportunities provided by the increased specialism and technical expertise required to meet ever more challenging customer demands.
