Breville Group Ltd (ASX: BRG) is a household name throughout the world. In the kitchen, “Breville” is synonymous with quality and reliability.
But how about the company itself? Should investors think the same?
Breville Group Ltd was established in Melbourne in 1932 as a radio manufacturer, but during the 1960s the focus shifted to household products and kitchen appliances. Breville Group Ltd now includes the brands Breville, Kambrook, Sage and several others, and the products range from toasted sandwich makers to vacuum cleaners.
Breville distributes throughout Australia, North America, Europe and Asia and continues to grow every year through innovation and smart distribution.
FY2017 saw Breville revenue grow 5.1% to $576.6 million. After-tax profit on that revenue increased by 7.3% to $50.2 million. For FY2018, Breville reported increases in revenue and profit of 7.7% and 8.7%, respectively.
In my opinion, they have demonstrated their ability to increase revenue while also marginally raising their profit margin. Breville has achieved a return on equity (ROE) of over 21% annually since FY2016, with slight increases each year.
Key to its growth and profitability has been the North American market, which saw growth of 16.3% in constant currency terms in FY2018. This is by far the largest market for Breville and is imperative to maintaining future growth.
With this growth, Breville has also been able to increase dividends each year, with dividends per share currently at $0.33, compared to $0.285 in FY2016. Although the dividend yield is nothing to get excited about at 2.98%, it is definitely moving in the right direction.
Breville is due to report half-year results for the period to 31 December 2018 on the 14th of February. This report will give an indication as to whether its US growth can be expected to continue and should provide some guidance for the future direction of the Breville share price.
Over the last 12 months, the BRG share price has struggled and is currently down about $1 from this time last year. However, over the longer term, Breville has delivered good results to its investors over the five-year period to 2019. In my opinion, Breville certainly has a competitive advantage in its brand name, reputation and distribution, so strong financial results should make this company a reliable long-term investment.
If you’re considering buying shares in Breville, keep an eye out for that half-year earnings report and check back on Rask Media for an update.
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Disclaimer: At the time of publishing, Max does not own shares in Breville Group Limited.