Nespresso Deal Boosts Breville

By Glenn Dyer | More Articles by Glenn Dyer

After the bloodbath yesterday in Telstra stock it was interesting that the lust to punish other companies wasn’t sustained, not after the stupid over reaction to CSL’s solid report and higher dividend on Wednesday.

Cochlear surprised and up went the shares (see separate story) and small appliance group Breville also had better than expected news for investors and the shares jumped a nice 5.9% to $10.87

What investors liked was the news of the success of Breville’s new partnership with Nespresso (owned by the giant FMCG group, Nestle) in North America which seems to be helping offset the continued decline in earnings from retailers pushing own brands (such as Aldi) and the ending of an agreement to distribute Philips products.

Investors didn’t even baulk that the company’s description of the coming year as “no less challenging” compared with last year. (The use of “ challenging" in an outlook or describe trading conditions is usually taken to mean bad news or a downgrade).

Breville reported a 5.1% rise in revenue for the year to $605.7 million while earnings before interest and tax (EBIT) rose 7.2% to $79 million, which saw a 7.3% rise in net after tax earnings to $53.8 million.

The company, which is 27% owned by Premier Investments (which is controlled by Solomon Lew) lifted final dividend to 15 cents a share (partially franked) up 7% from the 14 cents a year ago.

That made a total for the year of 30.5 cents a share, also up 7% (The 7% rises were a popular number in the Breville results).

Breville said its premium appliances (which it designs and develops and sells into 65 countries) rose nearly 10% in the year to $469 million (or 14.3% in constant currency terms, with earnings up 11.1%.

Sales of distributed and third-party products such as Kambrook and Philips for the year fell 8.8% to $136.2 million and earnings slumped ore than 20% as the Philips deal ended.

Breville said the distribution result was better this half than the first half when earnings tumbled 36%, was the distribution agreement with Nespresso started picking up the slack.

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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