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Treatt’s FY25 profit fell sharply on high citrus costs & softer US demand, while a new pact governs major shareholder Döhler. Disciplined costs & growth investments aim to rebuild margins.
This article covers information on Treatt PLC.
LON:TETTreatt’s FY25 numbers are down sharply, but broadly in line with July’s revised guidance. Revenue fell 11.8% and profits were hit harder by margin pressure and softer US demand. A potential takeover bid fell away after a large customer-shareholder built a 28% stake, and the Board has now formalised a relationship agreement to safeguard arm’s-length dealings.
Under the bonnet, there is disciplined cost control, expanding international reach, and a growing pipeline. The dividend has been cut to reflect lower earnings, and net debt crept up mainly due to last year’s £5.0 million buyback. FY26 has started “in line” with expectations.
| Metric | FY25 | FY24 (restated) |
|---|---|---|
| Revenue | £132.5m | £150.2m |
| Gross margin | 25.9% | 29.3% |
| Adjusted EBITDA | £16.2m | £24.4m |
| Profit before tax (pre-exceptional) | £10.3m | £18.5m |
| Statutory profit before tax | £7.0m | £17.9m |
| Adjusted basic EPS | 13.40p | 23.58p |
| Basic EPS | 8.38p | 22.71p |
| Total dividend per share | 5.60p | 8.41p |
| Net debt | £5.9m | £0.7m |
| Adjusted net operating margin | 8.1% | 12.9% |
| Adjusted ROACE | 7.5% | 13.3% |
Citrus remains half the business by revenue. Sustained high citrus prices squeezed margins and changed buying patterns, with some customers reducing volumes. Citrus revenue fell 11.2% (£8.1m). Synthetic aroma saw lower prices with flat volumes. The premium segment – tea, health & wellness, and fruit & veg – declined 13.3% to £30.0m, despite an “exciting win” in sugar reduction.
Geographically, the US – 40% of Group revenue – slipped 7.8% to £53.0m on weaker consumer demand and lower ready-to-drink coffee volumes. Europe was also affected by citrus dynamics, while Asia excluding China grew, lifting “Rest of the world” to £23.9m. China declined 16.8% to £9.6m as elevated citrus prices persisted and competition intensified.
Gross margin dropped 340bps to 25.9%, a sizeable compression in a product-led business. Cost discipline helped – admin costs (ex-exceptionals) fell 4.1% and headcount reduced from 379 to 353 – but couldn’t fully offset the top-line and margin pressure.
Net debt at year end was £5.9m (FY24: £0.7m), reflecting the completed £5.0m share buyback and weaker H2 trading. Cash generated from operating activities fell to £11.3m from £21.1m, impacted by lower profitability and higher inventories (£62.5m, up £7.6m) driven by citrus inflation and reduced volumes.
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The dividend is reset: 3.00p proposed final, 5.60p total for the year, offering 1.5x cover on statutory earnings (around 2.4x before exceptional items). To my mind, that’s prudent until margins and earnings stabilise.
On liquidity, Treatt retains strong facilities and covenant headroom: a £25.0m UK asset-based lending facility (with a £10.0m accordion) extended to June 2027, and a $25.0m US revolver expected to extend to July 2027. Interest cover before exceptionals was 30.1x, comfortably above covenant levels.
Natara Global’s bid lapsed in November due to insufficient support after Döhler Group SE accumulated 28% of the shares. Treatt has signed a Relationship Agreement with Döhler Finance Management B.V., giving Döhler the right to appoint one director while requiring all dealings to be at arm’s length and on normal commercial terms. Helga Moelschl joins as a non-Independent Non-executive Director on 1 February 2026 under this arrangement.
Why it matters: balancing a large strategic shareholder that is also a customer can bring commercial opportunities, but conflicts must be carefully managed. The formal agreement and Board oversight are there to protect minority investors while potentially unlocking growth.
On strategy, the focus is clear: be the partner of choice in high-growth beverage niches where flavour, functionality and quality intersect, while digitising platforms and using AI to speed product development and operations. Medium-term, management still targets a 15% adjusted net operating margin. With well-invested facilities in the UK and US and capacity to absorb growth, operating leverage is a genuine upside if revenue recovers.
The defined benefit scheme has been de-risked with an insurance buy-in completed in December 2025 with Just. The scheme is fully funded and no further employer contributions are being made. Exceptional costs were modest and primarily related to transaction fees.
Negatives first: earnings compression from citrus costs and US demand, a lower dividend, higher inventories tying up cash, and leadership transitions (CEO and CFO roles to fill permanently). The restatement of FY24 revenue is not material, but it is another housekeeping item investors will clock.
The positives: a resilient balance sheet with ample facilities, disciplined cost control, a growing pipeline, and tangible growth actions in Europe and Asia. The sugar reduction win signals relevance in a category that should outgrow the wider market. If citrus pricing normalises and US demand steadies, the margin rebuild could be meaningful given Treatt’s operational gearing.
Net-net, this is a reset year that preserves optionality. Execution on pipeline conversion, inventory normalisation, and a successful leadership handover are the near-term swing factors.
Treatt has a pre-recorded results presentation here: financial results webcasts.
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