Bury St Edmunds-based Treatt lifts annual forecast as first half momentum ‘gathers pace’
- Credit: Archant
Flavour and fragrance solutions company Treatt today signalled that profits for its current financial year are now likely to come in 'substantially' ahead of previous expectations.
Bury St Edmunds-based Treatt, which supplies ingredients to the food, beverage and consumer products sectors, said in a trading update that 'momemtum has gathered pace' since its AGM statement on January 27.
'This has resulted from a combination of strong growth to revenues (currently estimated to be up in excess of 20% over the comparable period last year), driven by both new business wins and growth with existing customers, combined with improved product margins as we continue to add value by moving up the value chain,' it said.
'As we enter the seasonally busiest time of the financial year, it is encouraging to see order books for the remainder of the current financial year, and into next year, across the group materially up on a year ago.'
It warned that the strength of the order book, combined with higher raw material prices, had results as expected in an increase net debt, now likely to be £10m to £12m at the half-year stage compared with £8.4m a year earlier, but added that its usual pattern of strong cash inflow during the second half should result in overall net debt falling 'significantly' by the year-end.
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Treatt, a member of the Top100 list of the 100 largest companies based in Suffolk and Norfolk, also said that, with the pound-dollar exchange rate having been relatively stable in recent weeks, its interim results covering the six months to March 31 should benefit from a reversal of a £500,000 foreign exchange loss during last year's first half.
Looking ahead, the group added that, with strong revenue growth and higher product margins, 'the board now believes that profit before tax for the financial year ending September 30 2017 will substantially exceed its previous expectations.'
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Daemmon Reeve, group chief executive, said: 'I am very proud of the team across the Treatt group and this announcement is reflective of the breadth of the company's capabilities and the quality of work that is ongoing.'
Treat also said that plans for the relocation of its Bury site, from Northern Way to the new Suffolk Business Park, contracts for which were exchanged in December, were continuing 'to progress well'.