Breville Shares Slip Despite Healthy Profit Result

By Glenn Dyer | More Articles by Glenn Dyer

A big thumbs down from investors to what seems to have been a very solid 2019-20 set of figures from appliance distributor, Breville Group.

Revenue and earnings were more than solid, gross earnings likewise and the performance in some markets like Europe and the US more than OK, despite the COVID-19 pandemic and lockdowns.

But the shares lost more than 8% in value yesterday to end the day at $25.

Perhaps it was what the company called a “noisy” year for expenses, especially the second half with a number of write-downs, or was it the lack of as 2021 forecast, which is understandable given the continuing impact of the pandemic and weak global growth.

Breville said its revenue during the coronavirus pandemic remained relatively unscathed, with home appliance demand increasing during the new era of working from home.

The company revealed a net profit of $66.2 million for the 12 months ending June 30, a dip of 1.8% from the year to June 2019.

Revenue jumped 25.3% to $952.2 million (as it expanded into France and Spain) while gross profit leapt 18.2% to $320.6 million.

Europe was the biggest growth segment in percentage terms, with segment revenues climbing 54.8% to $143.3 million (because of the move into Spain and France).

Revenues in the rest of World (ROW), Australia and New Zealand (ANZ), and North America climbed 25.6%, 18.3%, and 11.3%, respectively.

Breville said it’s EBIT (earnings before tax and interest) rose 11% to $126.5 million.

That saw the final dividend payout lifted to 20.5 cents a share from 18.5 cents, taking the total for the year to 41 cents a share up 10.8% from the 37 cents for 2018-19.

Solomon Lew’s Premier Group will get around 32% of the total payout for the year.

“We faced a cluster of headwinds in the form of Brexit uncertainty, exchange rates, US tariffs, and COVID-19, and equally we had our share of good fortune in terms of our inventory levels and the relevance of our products to the new normal,” Breville chief executive Jim Clayton said.

The company’s Australian operations grew revenue 18.3%, largely from increased online sales during the second half of the financial year when lockdown were imposed.

There was strong EBIT growth in both Breville’s Global Product and Distribution segments, which rose 14.5% and 23.8%, respectively.

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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