The Breville Group Ltd (ASX: BRG) share price is having a day to forget on Tuesday.
In morning trade, the appliance manufacturer's shares are down 13% to $23.72.
This follows the release of Breville's half-year results before the market open.
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Breville share price sinks on half-year update
Here's how the company performed during the six months ended 31 December:
- Revenue rose 2% to $905.8 million
- Gross profit up 6.7% to $332 million
- Earnings before interest, tax, depreciation and amortisation (EBITDA) up 12.2% to $159.2 million
- EBIT up 8.2% to $131 million
- Net profit after tax up 6.7% to $84 million
- Fully franked dividends per share up 6.7% to 16 cents
What happened during the half?
During the half, Breville reported a 2% increase in revenue to $905.8 million. This reflects a modest 1.6% lift in Global Product sales to $782.8 million and a 4.6% increase in Distribution revenue to $123 million.
Breville's Global Product segment's growth was held back by softer sales in the APAC and Americas regions, which offset strong revenue growth in the EMEA region. Management blamed its APAC weakness largely on the ANZ market, which overshadowed a strong half in Asia.
Pleasingly, the company was able to optimise gross profit and contain operating expenses to deliver a 12.2% increase in EBITDA. And while its net profit after tax grew at a slower rate of 6.7% due to higher borrowing costs, management expects these to reduce in the second half of the year as net debt decreases.
How does this compare to expectations?
The company's results were a touch mixed compared to expectations, which may explain some of the weakness in the Breville share price today.
Goldman Sachs notes that Breville missed on the top line but beat consensus estimates on the bottom line. It said:
BRG reported 1H24 this morning with group sales A$906mn (+2.0% YoY, -5% vs GSe and Visible Alpha consensus), and EBIT A$131mn (+8.2% YoY, 0% vs GSe and +2% Visible Alpha consensus). EPS of A$59 cents was -3% vs GSe.
Outlook
The company's outlook commentary is likely to be the main reason why the Breville share price is tumbling today. Management warned:
Macroeconomic and mean reversion headwinds are expected to continue through the second half. The Group will have new product launches in the second half and the continued regional rollout of products already launched. In this uncertain environment the Group will continue to focus on gross profit dollars while continuing to invest for medium-term growth.
It expects this to lead to earnings before interest and tax (EBIT) growth of 5% to 7.5% for FY 2024.
Goldman Sachs notes that this guidance is short of expectations. It said:
FY24 EBIT growth guidance was given at +5.0% – +7.5% vs pcp, implying range of A$181mn to A$185mn, which is -5.7% vs -3.5% vs GSe
The Breville share price remains up 13% over the last 12 months.
