Profits rise but tough times ahead

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THE Treatt Group’s pre-tax profits are up 42 per cent but it warns of tough times ahead.

The group’s preliminary report for the year ended September 30 shows revenue up 18 per cent over 2010 to £74.5 million with pre-tax profits up 42 per cent to £6.9 million.

The group is a manufacturer and supplier of conventional, organic and fair trade ingredients for the flavour, fragrance and cosmetic industries and takes its name from R C Treatt which was established in London in 1826 and moved to Bury St Edmunds in 1971.

The preliminary report says R C Treatt has performed well for a number of years and began 2011 well, but in the last quarter saw a drop in orders. Its revenues were still up four per cent to £45.3 million but the company has warned it will not perform as strongly in the year ending September 2012.

Group managing director Hugo Bovill stressed that the group was financially strong and said: “Of our three divisions, R C Treatt in Bury St Edmunds is having a more difficult time. Demand in the markets it operates in and the products it holds are weak.

“People carry on eating and drinking but the companies reduce their inventory levels so they do not have as much tied up in stock. When they run out there will be a rush to buy,”

He said they had experienced similar events two years ago. Mr Bovill said the nature of the materials and markets Treatt dealt in meant it could take three months for products to arrive from the Far East so the company could not operate a ‘just-in-time’ supply system.

He added: “It’s where our experience comes in. We’re going to be looking at costs, so, where possible, if people leave we’ll try not to replace them. We don’t have a plan to make anyone redundant, full stop.”

The group says growth over the last year has largely been driven by strong performance by Treatt USA, together with a marked turn around in the fortunes of Earthoil, the group’s cosmetics ingredients business which specialises in organic and fair trade certified products.