Treatt PLC, the manufacturer and supplier of flavour and fragrance ingredients, primarily from essential oils, announces today its preliminary results for the year ended 30 September 2001.
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SUMMARY
· Group turnover increased by 15% to £27,600,000 (2000: £24,100,000)
· Profit before tax up 4% to £2.83m
· Dividends up 4% to 8.1p per share
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By GlobalData· Earnings per share increased by 0.5% to 19.4p (2000: 19.3p)
· Florida Treatt sales up 18%
· Aroma chemical sales up 19%
· New facility acquired in Florida, USA
CHAIRMAN’S STATEMENT
2001 was another year of satisfactory progress for Treatt. Group turnover increased by 15% during the year to £27.5 million. Profit before tax increased by 4 percent to £2.83 million (2000: £2.72 million). Earnings per share for the year at 19.4 pence have increased 0.5 percent on 2000. The Board is recommending a final dividend of 5.5 pence (2000: 5.3 pence), giving a 4 percent increase in the total dividend for the year to 8.1 pence (2000: 7.8 pence) per share.
Florida Treatt continued to perform well as sales in the USA increased by 18 percent during the year which helped generate a significant contribution towards Group profitability. This result underlines the continuing importance of the North American market to our future strategy for growth. Last year we referred to the Millennium effect on the buying patterns of some of our major customers. We are pleased to report that these activity levels are now running satisfactorily. Sales of distributed aroma chemicals in the U.K. continued to grow strongly, though a more modest level of growth is anticipated in the future.
We continue to invest heavily in our operations and as such we are pleased that earlier this year we purchased a larger freehold facility in Lakeland, Florida together with an adjacent 5 acres of land. This site is close to our existing premises. Renovation and engineering works will shortly begin as we expect to relocate to the new facility during the coming year. To fund this project we raised US$5 million from Variable Rate Demand Bonds, which bear a low rate of interest and are redeemable over 20 years. US$2.5 million of the debt was covered with an Interest Rate Swap and fixed at 3.54 percent for the next 5 years.
Our Customer Relationship Management System was fully implemented in the second half of the year and is beginning to show benefits. As referred to in previous statements we will continue to invest heavily in information technology in order to facilitate future profitable growth.
Prospects
Current year trading is below the level experienced this time last year. However our order books are higher than last year.
The prospects for 2002 are encouraging. However, we are still cautious about the full year result as there remains the possibility of further economic slowdown in the USA. Furthermore, our increased level of capital investment will result in much higher depreciation charges this year. Similarly, the additional borrowing will also increase the amount of interest payable.
Orange oil, an orange juice by-product is an important raw material for Treatt with orange products accounting for 12 percent of the Group’s turnover in 2001. For R.C. Treatt, in the UK, the majority of orange oil is sourced from Brazil and the balance from Florida, USA. However, this season’s Brazilian crop has been reduced as a result of drought which has led to a significant rise in orange oil prices. In the USA, Florida Treatt purchases some Brazilian oil, but in the most part uses Florida produced material which has been booked in advance and should be delivered as normal, subject to adverse weather conditions in Florida affecting the crop. All of this year’s contracted sales have been secured with supplies at fixed prices. However, any new business will be at higher prices based upon commitments we have made with our regular suppliers, both at fixed and open prices. Whilst the overall impact on this year’s results is hard to predict it appears likely that if sustained throughout the year, the recent increase in orange oil prices will increase Group turnover in orange oil products, which could lead to a one-off benefit to profitability in 2002.
People
On 12 October 2001, Ron Fenn resigned his position as a Non-executive Director of the Group in order to take up an executive post with a US based corporation. On behalf of the Board I would like to thank Ron for his significant contribution and to wish him well in his new appointment.
Following Ron’s resignation we expect to appoint a new Non-executive Director to the Board in due course.
We are pleased to announce that during the year five employees including the Managing Director achieved 25 years of service with Treatt, a remarkable feat that reflects admirably upon their loyalty and dedication to our business.
Finally I would like to thank all of our employees, in England, Florida and Singapore for their continued commitment and skill. We face a particularly demanding year ahead as we continue to invest in our IT systems and in our new Florida facility, but we are fortunate to face these challenges with the benefit of an experienced and dedicated team of people.
EDWARD DAWNAY
Chairman
3 December 2001
