Fevertree uncertain about impact of Covid-19 ahead of full-year results

Fevertree Drinks is set to unveil its full-year results this month, but the company is unable to quantify the impact the coronavirus pandemic will have on its overall performance in 2020.

In March, the producer of premium drink mixers told investors that it is unable to give guidance for 2020 as a result of the ongoing Covid-19 outbreak, with the company opting to postpone the unveiling of its full-year results to April.

Fevertree said that trading in the first two month of 2020 was in line with the board’s expectations, with strong sales recorded across all its regions, particularly in the US market.

‘However, given the current high level of uncertainty it is too early to quantify the impact the Covid-19 crisis will have on the outturn for the remainder of the 2020 financial year and therefore the board is not able to provide financial guidance at this stage,’ Fevertree said in a statement.

Balance sheet remains ‘extremely secure’

Despite uncertainty ahead of its full-year results, the drinks maker reassured investors that the company remains ‘extremely secure’ from a financial perspective.

‘We are debt free, with a year-end cash position of £128 million is underpinned by strong cash flows,’ Fevertree said.

‘The group's unique asset light, outsourced business model means we have a low fixed cost base, a small, dedicated team and the flexibility to manage the significant challenges ahead.’

Fevertree shares under pressure in 2020

It has been a challenging first quarter for the drinks maker, a fact reflected in its share price, with the stock falling 56% to hit a low of 900p a share on 23 March – down from £20.91 at the start of the year.

Since then, the stock has clawed back some of its early losses, with Fevertree trading at £14 a share as of 15:00 (GMT) on Monday.

However, analysts at RBC Capital Markets and Deutsche Bank both downgraded their price target for the stock in April to £11 and £12.50, respectively.

Based on Fevertree currently trading at £14 levels, the two investment banks believe the stock could slide between 10% - 21% lower over the course of the year.

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