Treatt’s unexpected trading statement of 15 August reduced FY22 pre-tax profit guidance to a range of £15.0–15.3m versus our previous forecast of £21.9m (pre-exceptional rather than normalised). The main drivers of the downgrade were lower sales in tea, driven by weak consumer confidence in the United States; over-hedging, which resulted in losses crystallising due to the devaluation of sterling against the US dollar; continued input cost inflation; and slower growth in China owing to ongoing COVID-19 restrictions. All categories excluding tea are showing strong momentum, and the company is taking active steps to limit its FX exposure and prevent over-hedging in future. Management remains confident in the long-term growth drivers for Treatt.