A Treatt in store?

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Related tags: United states

UK flavour and fragrance company Treatt saw turnover increase 11
per cent for the year with a slight dip in pre-tax profit from
£2.83m in 2001, to £2.77m for 2002, the company reports today.
Investment in the USA is paying off.

UK manufacturer and supplier of flavour and fragrance ingredients Treatt saw turnover increase by 11 per cent to £30.7m (€48.2m) for the year with a slight dip in pre-tax profit from £2.83m in 2001, to £2.77m for 2002, the company reports today.

After a dull first quarter for sales, the following nine months were strong, the company added, assisted by the group's position in orange oil products, which resulted in somesignificant stock profits.

Investment in new facilities in the USA seems to have paid off for the company with Florida Treatt, now renamed Treatt USA, experiencing a good year, winning newbusiness across its product range and sales growing by 27 per cent. In theUK, sales from the main operating company, R. C. Treatt, grew largely due toincreased orange oil prices and also due to increased sales to existingcustomers across the product range.

"We are optimistic for growth in the US and we have renamed our US operationTreatt USA. Strong growth has been experienced in the last twelve months,"​ confirmed Edward Dawnay, the chairman of Treatt.

The group's order books at year-end, both in the UK and the USA, were higherthan last year, Treatt stated this week. According to the company, the results for 2003 will reflect our increased level of capital investment, both in the UK and the USA, resulting in higher depreciation charges. Similarly, the additional borrowing at fixed interest rates will also increase the amount of interest payable. Treatt is optimistic for growth in the US but higher depreciation and interest charges will, in the short term, moderate any improvement in results.

In addition, orange oil, an orange juice by-product which is an important raw material for Treatt, is at a high price level. Orange products accounted for 19 per cent (2001: 12 per cent) of the group's turnover in 2002, mainly due to higherprices of orange oil. For R. C. Treatt in the UK, the majority of orange oil issourced from Brazil and the balance from Florida, USA. Orange oil is unusuallyfirm for this time of year, when it normally weakens as Florida's new cropapproaches.

Due to the strengthening position of Treatt USA in beverage ingredients for theAmerican domestic market the group's business is becoming more seasonal, reports the company, in that the first quarter of the financial year is set to be a quieter quarter.

With the exception of orange oil, as forecast last year, 2002 again saw many ofthe group's raw materials, and therefore products, remain at historically lowprice levels. Treatt anticipates that this will continue with orange oil remaining an exception.

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