Treatt PLC to top market forecasts after strong start to new financial year

Treatt PLC () has said profits for its current financial year are expected to “materially exceed market consensus” after what it noted was a strong operating performance across multiple categories and customers.

In an update on trading so far for the year ending September 30, 2021, the natural extracts and ingredients maker said it had seen “new organic revenue growth and enhanced margins” from an improving product mix, adding that evolving beverages market was driving potential for further revenue and margin growth.

As a result, Treatt said profits for the first four months of its current year are expected to be ahead of its previous expectations for the period, adding that it is “cautiously optimistic” that the current momentum will result in pre-tax profits for the full year surpassing market predictions of £15.1mln.

“We’re encouraged by our strong trading momentum continuing into the current financial year. Performance has been positive across a number of our key categories, with particular growth in our solutions for the expanding alcoholic seltzer market, utilising our expertise in natural extracts”, Treatt chief executive Daemmon Reeve said in a statement.

“Whilst mindful of the global backdrop, we are confident that we can make further progress this year, to grow organic revenue across an increasingly global and diversified customer base who benefit from our technical expertise and value-add approach”, the CEO added.

In a note on Friday, analysts at Peel Hunt hiked their target price for the company to 975p from 775p and retained a ‘buy’ rating, saying the company is “on a virtuous circle, where stronger growth is both delivering higher profits and funds to invest in additional capability and capacity”.

“We see a material premium as reasonable given the scope for sustained growth as the new developments deliver greater capacity and higher margins”, the broker added.

Shares in Treatt surged 13% to 870p in early deals.