The Breville Group Ltd (ASX: BRG) share price fell around 5% today after releasing its FY23 half-year report and guidance for FY23.
Breville is a leading kitchen appliance maker, which sells its products around the world.
Breville’s HY23 report
Here are some of the main highlights from the result for the six months to 31 December 2022.
- Revenue increased 1.1% to $888 million
- Gross profit improved 3.8% to $311.3 million
- EBIT (EBIT explained) improved 7.6% to $121.1 million
- Net profit after tax (NPAT) rose 1.3% to $78.7 million
- Interim dividend maintained at $0.15 per share
Breville pointed out that this was a record half for sales. The Americas region saw “solid growth”, the Asia Pacific region was “steady” and Europe, the Middle East and Africa (EMEA) was “volatile”.
The appliance maker managed to improve its gross profit margin, despite inflation and exchange rate volatility. That’s a good sign for the Breville share price and demonstrates its market strength.
Operating expenses were “controlled and aligned with sales growth”. Net profit grew slightly faster than revenue, but less than EBIT because of increased finance costs. Net debt increased because of a “function of inventory planning process” and the Lelit acquisition. Lelit is a high-end Italian coffee machine maker, which Breville bought for $169 million.
The company is expecting good cashflow in the second half as receivables from customers are collected and a more predictable supply chain “allows a return to a more normal inventory flow model.”
FY23 outlook for the Breville share price
Management said that the financial year continues to be one of competing economic headwinds and tailwinds. The tailwinds including new product launches, a growing direct-to-consumer channel, maturing new geographies and cost improvements for the year.
If there are no further “significant changes in economic conditions in its major trading markets, and taking into account its expecting spending on growth initiatives, full year EBIT is expected to be between $165 million to $172 million. That would be growth of between 5% to 10% compared to FY22.
With the Breville share price being 35% lower than its peak in August 2021, yet still predicting profit growth for FY23, I think the business is worth investing in if investors are thinking about choosing Breville.
