Fevertree Drinks PLC (LON:FEVR) has said it is committed to pay its final dividend although half of its group revenue has been hit by the coronavirus lockdowns.
In a trading update, the soft drinks producer said many on-trade customers, such as pubs and restaurants, which represent 45% of group sales, have been “severely” impacted and it is offering help to them by extending payment terms.
However, Fevertree added, the off-trade channel, such as supermarkets, which account for 55% of group sales, saw a spike in the initial weeks of the coronavirus outbreak as customers stockpiled ahead of isolation.
The group will pay a final dividend of 9.88p per share, bringing the total distribution for the full-year to 15.08p, up 4% on 2018.
The AIM-listed firm said it is “financially strong” enough to cope with the crisis.
In the year to December 31, 2019, Fevertree's revenue jumped by 10% to £260mln, although pre-tax profit dropped by 4% to £72mln as margins were squeezed.
The firm's gross margin decreased to 50.5% in 2019, down from 51.8% in 2018, due to higher prices of glass bottles, a subdued market in the UK and inventory being held for longer as a result of uncertainty around Brexit.
Fevertree said its cash at the year-end had doubled to £128mln.
Analysts at Liberum said the update was "encouraging" and the impact of channel mix on gross margin is "likely to be relatively benign", so Fevertree is "well-positioned" to navigate the crisis.
Shares advanced 8% to 1,470.91p on Wednesday morning.
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