Lemon prices fail to sour Treatt

Announcing results for the year to 30 September, the group said it saw revenues up from £38m to £50m, an increase of 30% while pre-tax profits grew 8.4% to £3.06m (2007: £2.83m). Chairman Edward Dawnay said that overall Treatt had a good year, with the core businesses of R.C. Treatt and Treatt USA performing well. However, in the last two months of the financial year the world financial crisis had a significant effect, as the sharp strengthening of the US dollar resulted in adverse foreign exchange translation differences. Sales of orange oil products, which represent 19% of revenue, increased by 54% during the year while the contribution from orange oil products rose by 42% as a result of capacity and efficiency improvements. The price of orange oil remained relatively stable but following the worldwide shortage of lemons there was, as expected, a very sharp increase in the price of lemon oil. This had several significant effects on the group. As a consequence of raw material shortages, Treatt took immediate steps to secure and strengthen its inventory position which consequently enabled it to win new business as well as generate some stock profits as a result of using lower cost lemon oil against higher priced sales. Looking ahead, Dawnay said the coming months were going to see a period of significant economic uncertainty and it was unclear how this would affect demand for Treatt's products.