Fever-Tree Drinks PLC shares dropped 5.13% to $775.55 in pre-market trading after the mixer company released interim results for the first half of fiscal 2026, revealing a mixed picture of accelerating top-line growth offset by significant U.S. profitability pressure.
Brand revenue reached £183.6 million, an 8% increase at constant currency, driven primarily by the company's core five flavors — Mediterranean Tonic, Ginger Beer, Ginger Ale, Pink Grapefruit, and Lime Soda — which accounted for roughly half of global sales and generated approximately 85% of first-half revenue growth. Beyond-tonic products grew 13% and now represent 47% of total sales.
U.S. revenue rose 11% in the half, with growth accelerating from 6% year-over-year in the first quarter to 11% in the second quarter and further to 16% in the July-to-August period, according to Circana data covering roughly half of U.S. off-trade sales. The rest of the world posted 5% reported growth, underpinned by strong momentum in Australia and Canada.
Group adjusted EBITDA increased 9% to £20.1 million, with the adjusted EBITDA margin expanding 20 basis points to 10.9%. However, the U.S. segment's adjusted EBITDA margin contracted sharply by 190 basis points to just 6.2%, a significant deterioration that likely weighed on investor sentiment despite the revenue gains. Margins in the rest of the group expanded 70 basis points to 24.5%, though this included a £2.6 million provision for the UK on-trade extended producer responsibility levy.
Normalized earnings per share rose 5% to 11.00 pence. In Europe, reported revenue grew 10%, with underlying growth closer to 4%, and the company contributed over 50% of value growth in the ginger beer category at retail. In the UK, revenue rose 3% and Fever-Tree gained approximately 2 percentage points of off-trade value share year over year.
The company reaffirmed its capital allocation framework, pointing to a £60 million share buyback program currently in progress and total shareholder returns of £160 million across fiscal years 2025 and 2026. Equity issued to Molson Coors totaled £154.0 million, while share buybacks amounted to £123.4 million and dividends came to £33.6 million. Net cash at the end of H1 stood at £68.0 million, down from £96.0 million at December 2024. The ongoing buyback program is expected to reduce total shares outstanding by approximately 7% compared with December 2024 levels, inclusive of the Molson Coors equity transaction.
Fever-Tree's full-year modeling assumes depreciation of approximately £4.0 million, amortization of around £4.5 million, share-based payment charges of roughly £5.0 million, net interest income of about £2.5 million, and an underlying effective tax rate of approximately 25%. The company also highlighted that between 44% and 71% of adults in major markets intend to moderate their alcohol consumption over the next year, representing an estimated retail sales opportunity of more than £700 million in the UK alone.
Shares traded approximately 20% below their 52-week peak of $973, with a current price-to-earnings ratio of 41.11 and an enterprise value-to-EBITDA multiple of 28.51. Free cash flow consensus expectations call for over £100 million across fiscal years 2027 and 2028 combined.
