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Treatt Reports Strong 2011 Financial Results
Posted: December 5, 2011
Treatt Plc reported its its preliminary financial results for the year ended Sept. 30, 2011. The company saw an 18% rise in revenue over 2010’s £63.3 million, resulting in £74.5 million for 2011. Group operating profit was £6.9 million after FX, which notes a 40% rise from 2010’s £4.5 million, and profit before taxes was £6.4 million, up 42% from 2010. Additionally, dividends increased to 14.5p per share, up 11.5% over 2010’s 13p per share; earnings per share rose 40% to 42.5p; and net assets per share increased to £2.44, up from 2010’s £2.15.
In the chairman’s statement, Treatt chairman James Grace commented, “The group has enjoyed another good year in 2011 with strong growth in both sales and profits.” He noted the company continued its 13-year growth trends and that during the past four years, Treatt’s revenue has risen by 96% and its profits before tax by 125%.
Grace credited current growth to “a combination of new business wins, continuing growth in the Americas and the well-documented increase in global raw material prices” such as orange oil, one of the company’s most significant products. Additionally, he said, “The growth over the last year has largely been driven by a very strong performance by Treatt USA, which principally serves the North American market, together with a marked turn around in the fortunes of Earthoil. This has been underpinned by R.C. Treatt, which has continued its steady performance of the last few years although, due to a weak Q4, its profits were down on the prior year.”
Of the specific company divisions, Grace commented, “Over the last few years, R.C. Treatt has performed consistently well and whilst 2011 has proved to be a more difficult year, revenues still grew by 4% to £45.3m (2010: £43.6m). The company began the financial year with a healthy order book, and this, together with the strong orange oil price, resulted in nine months of good profitability, but the final quarter of the year was a disappointment, with sales slowing and margins coming under significant pressure. The company has benefited, over the last few years, from its wide geographic spread, exporting to about 90 countries, which has enabled it to maintain a steady performance through turbulent times. Both Europe and Latin America were areas of good growth for the company, with sales to Germany growing by 24%.
“For Treatt USA, 2011 was a year of impressive growth. Although it did enjoy some benefits from the spike in orange oil prices, the underlying performance of the business was at a new level to that seen in previous years. Year on year US dollar sales grew by 49% although gross margins did fall during the course of the year. As well as a sharp increase in the level of orange oil sales, the growth in specialty sales continued with another year of double digit growth, increasing in US dollars by 14% (2010: 15%) across a wide range of products, and with total overheads remaining unchanged from the previous year, profits more than doubled compared to 2010.
“Following a few years of difficult trading, 2011 has been a good year for Earthoil as it turned into profit. Year-on-year sales for Earthoil grew by 64%. This did, however, include a substantial shipment that had been delayed from the previous year. On a like-for-like basis, sales grew by an encouraging 23%. This growth was achieved without any increase in overheads and this, together with the absence of a loss-making South African subsidiary, which was disposed of last year, resulted in a net improvement to the group of £0.6m.”
Grace concluded, “In summary, the group has performed well over its entire product range over the last four years through difficult times, but the view for the current year ended Sept. 30, 2012, is it will be one of the more challenging years in recent times with profits coming under pressure. However, the world continues to eat, drink and buy quality cosmetics, and overall demand continues to grow in spite of economic conditions. As a truly independent and global business, Treatt remains well placed to take advantage of competitive opportunities.”