Treatt (LON:TET) has yet again reported a strong set of results.
The strategy to improve the quality of earnings is coming through, as proven by these results: the move from commoditized sales to more value-added products has caused sales to be marginally down, and yet margins are up.
We leave our forecasts unchanged as we believe the new strategy will continue to play out.
Strong start to the year
H1 sales were 1% ahead of our forecast, and operating profit was in line with our forecasts, but this was despite a net FX loss during H1. This should reverse in H2. We expect a more even balance of profitability between H1 and H2 in 2016 compared to 2015, which witnessed a weak Q1.
We therefore leave our FY16 forecasts unchanged at this stage, but see potential for upside given management’s conservative track record and the momentum in the business.
To read the entire report, please click on the PDF file below.