• Treatt plummets 30%.
• The company reports a profit before tax to be between £15 million and £15.3 million.
• The group’s margins have been adversely affected by increased volatility in FX movements during H2.

Treatt announced its trading update on Monday, which sent its shares declining 30%.

The manufacturer and supplier of natural extracts and ingredients stated despite expecting to report strong revenue growth, it has been affected by a number of separate factors which will impact profitability.

The company now expects profit before tax to be between £15 million and £15.3 million.

Due to consumer confidence in the US deteriorating, this has caused lower demand and materially reduced its margins.

Furthermore,  the group’s margins have been adversely affected by increased volatility in FX movements during H2. The rapid devaluation of the Sterling against the US Dollar during the period has had a significant impact on margins.

Meanwhile, Treatt is experiencing significant input cost inflation. It seems the group aren’t being “treated” well.

“Whilst clearly disappointed by the short term impact on profitability, we remain encouraged by the underlying trading performance of the business and are confident in the long term growth drivers for Treatt,” said Daemmon Reeve, CEO of Treatt.

The firm expects to issue a trading update in October 2022, after the completion of the financial year to 30 September 2022.