Tonic maker Fevertree’s half-year profit dips on cost pressures

Products from the drinks company Fever Tree are displayed in London, Britain May 11, 2016. REUTERS/Neil Hall

Sept 13 (Reuters) – Tonic maker Fevertree (FEVR.L) reported a fall in profit for the first half of the year despite strong demand in Europe and the US, as inflationary pressures and continued exposure to Trans-Atlantic freight costs bit into earnings .

The London-based company also said availability of glass will be restricted in the second half of the year and is expected to hurt revenue.

“Labor shortages at our East Coast bottler in the US have impacted our ramp up,” Fevertree said.

The company said it was working with suppliers to secure its glass requirements for 2023.

It added the labor shortages have resulted in greater production volumes required from the UK, which has increased the group’s exposure to sea freight costs “in the short term”.

Fevertree reiterated that it expects full-year core profit to be in the range of 37.5 million pounds ($43.94 million) to 45 million pounds.

The group said uncertainty and the risk of disruption for the year remain high as cost pressures continue to impact its business.

The London-based company said its adjusted core profit for the six months ended June 30 was 21.9 million pounds, compared with 29.2 million pounds the previous year.

($1 = 0.8535 pounds)

Reporting by Muhammed Husain and Radhika Anilkumar in Bengaluru; Editing by Krishna Chandra Eluri

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