Electrical goods importer and distributor Breville Group has upgraded its full year earnings guidance and as it starts fighting off the takeover offer from rival appliance group, GUD Holding Ltd.
Breville said yesterday its sales and earnings had exceeded expectations based on trading for the year-to-date.
"Following positive trading, Breville expects full year forecast underlying earnings before interest, tax, depreciation and amortisation (EBITDA1) to be approximately $38.5 million and full year underlying net profit after tax (NPAT) to be approximately $19 million," Breville said in a statement.
"This compares to broker consensus estimates of $35.2 million for FY 2010 EBITDA and $17.8 million for FY 2010 NPAT."
Not including an onerous lease obligation for a property in Victoria, Breville said it expects adjusted EBITDA to be $41 million.
Chief executive Stephen Audsley said there had been an improvement in trading particularly in Breville’s core Australian and North American markets.
"Sales in the first four months of the financial year have been pleasing and trading conditions continue to show positive signs during the important pre-Christmas selling period," Mr Audsley said.
"Based on current trading conditions, our strong momentum is expected to accelerate the growth on the previous corresponding period as we head into the second half."
Breville expects to deliver this earnings growth despite adverse foreign exchange movements on the translation of its international earnings and despite having partly hedged its net USD import commitments at rates below the current spot exchange rate.
In October, GUD Holdings Ltd launched an all-scrip bid for Breville, valuing the target at $2.20 per share, or $322 million on an enterprise basis.
The deal offers one GUD share for every four Breville shares.
GUD has commitments from holders of around 47% of Breville’s shares to accept its offer, subject to there being no higher offer.
GUD controls just over 19% of Breville in its own right which it acquired in late May.
Breville chairman John Schmoll told Breville’s annual general meeting yesterday that given the strategic value of the business’ product portfolio, and its international footprint, it was not surprised that there was interest in acquiring the Breville again.
"Your board has previously advised you to take no action in relation to GUDs offer," he said.
"We continue to advise you to do this.
"The board has commissioned an independent expert to consider the offer.
"Once we have received that report, your board will take the expert’s views into account and will be in a position to issue its targets statement."
Breville shares closed untraded at $2.30. GUF shares fell 3.8%, or 34 cents to $8.63.
Breville has to lodge its target statement defence with ASX, GUD and ASIC by today but has been allowed to delay its despatch to shareholders till next Monday.
