Treatt (TET) has released a Q124 trading update, covering the three months to 31 December, ahead of its AGM later today. As indicated at its FY23 results at the end of November, TET continued to experience customer de-stocking in Q124. It consequently saw a decline in revenue in the period, as had been expected. There are signs that this is now reversing, and TET consequently expects “demand to return to more normal levels in [fiscal] Q2”. This is also in line with its previous expectations. TET is “encouraged by current trading, underpinning our confidence in our trading performance for the year ahead”. TET is on track to meet our FY24 expectations, albeit with delivery weighted to H2, and we leave our forecasts unchanged. This includes an assumed single-digit revenue decline in H124E, more than offset by double-digit revenue growth in H224E, producing 5% revenue growth for FY24E. TET has reiterated its commitment to volume growth, which would help to drive operational leverage as it utilises the spare capacity provided by previous investment, most notably in the new UK site at Skyliner Way. TET notes that it has “a healthy pipeline of opportunities with both new and existing customers”, helped by its ability to support them in responding to consumer demand for healthier and more natural beverages. TET continues to focus on cash generation and expects a further fall in net debt in FY24. We forecast a fall in net debt from the £9.8m reported in FY23 to £3.7m in FY24, before moving to a £4.5m net cash position in FY25. TET currently trades on 19x FY25E PE, a 17% discount to its 10-year average of 22.8x.