The Breville Group Ltd (ASX: BRG) share price has tumbled nearly 5% this morning after the company released its full-year FY20 results.
Here are the 5 key points
- Revenue grew 25.3% to reach $952.2 million
- EBITDA came in at $126.5 million, an increase of 11% on FY19
- Net profit after tax (NPAT) was down 1.8% to $66.2 million
- Net cash of $128.5 million – including net proceeds of $100.7 million from a recent capital raise
- Final dividend of 20.5 cents per share (cps)
Bell Potter/Citi estimates for NPAT were $71.9 million, while consensus estimates were $76.9 million. Breville’s statutory result missed the mark, but its normalised NPAT came in at $75 million.
The normalised result adjusts for an increase in the company’s doubtful debts provision, a write-down of its IoT platform, one-off COVID-19 cost savings, and reduced marketing spend in 4Q20 which isn’t expected be repeated in FY21.
Regional performance
In North America, Breville grew product revenue by 11.3% to $420.4 million. Management said the second-half sell-in was impacted by retailer lockdowns and the delay of Amazon Prime Day, which shifted some orders to the first-half of FY21.
The Australia and New Zealand segment achieved 18.3% growth in product revenue, driven by strong second-half sales on the back of increasing online adoption.
Europe recorded the strongest growth, with product revenue jumping 54.8% to $143.3 million. This was the result of strong performance in existing markets and a further roll out to Spain and France.
Finally, the rest of world segment grew product revenue by 25.6% to $43.3 million. The company said this segment is, by nature, lumpy, and performance was in line with expectations against a weaker baseline in FY19.
Breville’s dividend
The final dividend of 20.5 cents per share takes the total FY20 dividend to 41 cents per share – up 11% compared to FY19. The final dividend is 60% franked and will be paid on 8 October 2020.
Breville has established a new dividend reinvestment plan (DRP), replacing its previous DRP which has been inactive for the past several years. The DRP will apply to the final dividend and has been full underwritten to preserve cash and balance sheet flexibility.
Management commentary
Chief executive Jim Clayton described FY20 as another good year for the company despite numerous challenges:
“In FY20 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’.
Overall, I am encouraged by the way our team and processes have responded, how our strategic projects have progressed, and by how we have strengthened our balance sheet against any future shocks. We emerge from FY20 with momentum and a hardened foundation to build upon over the next five years.”
What now?
Like many companies, Breville refrained from providing guidance for FY21.
The company said that after an initial shock, its value chain is transitioning into a state of “new normal”, which includes a material component of unpredictability.
Breville also said its current business trajectory is healthy, adding that lockdowns and work-from-home have been tailwinds so far.
Importantly, the company’s ~$100 million capital raising in May has strengthened its balance sheet to provide resilience and funds for growth.
The Breville share price has been a strong performer this year and expectations were high coming off a strong trading update back in May. I’m not a buyer of Breville shares at current levels, I’d rather invest in other ASX growth shares like the one profiled in the free investment report below.
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