Fevertree Drinks PLC on Wednesday reported a drop in annual profit as it struggled with higher costs in 2022, particularly pricier glass used for its bottled sodas.

Shares were up 6.2% at 1,145.00 pence each on Wednesday morning in London.

The London-based premium drink mixers producer said pretax profit totalled £31.0 million in 2022, down sharply from £55.6 million in 2021, as operating profit fell to £30.6 million from £55.6 million.

Administrative expenses increased to £88.2 million from £75.3 million a year earlier.

Revenue, however, climbed by 11% to £344.3 million from £311.1 million. This was particularly driven by 23% growth across the UK and 14% growth in Europe.

Fevertree explained that industry-wide inflationary pressure hurt its margin during the year, most notably in glass costs and trans-Atlantic freight costs. Gross margins thus reduced to 34.5% from 42.1% a year earlier.

This was partially mitigated by positive pricing actions and improvements in sales mix.

Chief Executive Officer Tim Warrillow said: ‘The group has delivered a strong sales performance with double-digit revenue growth underpinned by a very encouraging 18% average growth across the US, Europe and Rest of the World. We have seen an encouraging start to 2023 in our key growth markets and are confident of maintaining the group’s momentum in the months ahead.’

Adjusted earnings before interest, tax, depreciation and amortisation amounted to £39.7 million, down from £63.0 million in 2021.

Fevertree proposed a full-year dividend of 16.31 pence per share, up 2.0% from 15.99p a year prior.

The company also reiterated its full-year guidance for 2023, which expects revenue between £390 million and £405 million and earnings before interest, tax, depreciation and amortization between £36 million and £42 million.

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