Treatt has reported first half results in line with expectations. It had already indicated its revenue expectations in late April and today confirms the delivery of £66.3m in sales, which is a 9% increase on the prior half. At the same time, it flagged that profits would be more skewed to 2H. The PBT reported today is £6.3m, which is a 40% decline on last year but ahead of the result from 1H20. 1H21 enjoyed an unusually strong start to the year due to the switch in beverage sales to retail channels during COVID (retail is less seasonal vs on-trade). The interim dividend was increased by 25% to 2.50p. There was growth in 5 out of the group’s 6 categories, with only Tea showing a decline due to an especially strong pipeline fill last year. The stronger growth however came from the larger but lower-margin categories, which resulted in the gross margin falling to 27.5% vs 35% in 1H20. There were also higher opex costs as the company has continued to invest for the next stage of its development. Net debt closed the period at £19.8m which includes the proceeds for the sale of Northern Way, but also a working capital outflow of £15m. This reflects some timing of sales (March was strong), but mostly a higher inventory build as the group’s order book is showing an increase of over 25% on the prior 1H. We expect a cash inflow in 2H to reduce net debt to c£10m. This order book gives Treatt confidence over 2H sales and it increases its guidance to FY growth of 15%, which is c£3m above our old forecast. The mix of business is expected to move back towards the higher-margin categories so this will provide the boost in 2H profits suggested in our unchanged PBT forecast of £21.5m. The group remarks that it is on track to deliver consensus PBT (£21.7m). We leave our TP at 1260p and reiterate our BUY rating.