BRG - Breville Group

[Dona Ferentes]

"Solid Year at top of Guidance"

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• Solid revenue growth against a subdued consumer backdrop and building on three strong years of growth in FY20-22 of 25.3%, 24.7% and 19.4% respectively
• 2H23 revenue growth rate stepped up to 9.4% led by EMEA recovery
• Gross profit grew by 6.4% (2H23 10.6%) with gross margins strengthening as inflationary costs were recovered and promotions well controlled
• Operating costs aligned to deliver EBIT at top end of guidance with 10.0% growth over PY
• NPAT grew in line with sales at 4.2% after absorbing higher financing costs
• Overall reported inventory was relatively flat, with core inventory managed down $96.6m through reduced 2H23 purchases rather than discounted sales. Further inventory reduction expected in FY24
• Full year dividend of 30.5c cents per share (100% franked)
• Seasonal cash inflow in 2H23 of $90.9m and full year outflow of $(117.2)m primarily due to acquisition of Lelit and higher year-end receivables following strong Q4 sales

Commenting on the Group’s result, Breville Group CEO, Jim Clayton said:
“A solid year of performance for the Group, delivering guidance once again, against a challenging and dynamic backdrop with a subdued consumer, inflationary headwinds, a strong denominator, and retailer destocking..."

 

[Dona Ferentes]

Breville’s profit rose 6.7 per cent to $84 million in the first half of 2024, from a year ago, in a subdued consumer backdrop. Revenue was up 2 per cent.

It paid 16¢ in dividend, up 6.7 per cent and expects FY24 earnings before interest and tax growth to be in the range of 5 per cent to 7.5 per cent.

Group CEO, Jim Clayton said:
“A solid half of performance for the Group delivering 8.2% EBIT growth against a subdued consumer backdrop, with Gross Profits up 6.7% and Revenue up 2.0%. The strength of our new product launches, expansion of new markets and the continuing coffee tailwind supported top line growth as cost-of-living pressures and mean reversion buffeted the business. Our 5-year revenue CAGR is running at 15.5%.

Savings in input costs were partially reinvested into promotion and price, but only where ROIs supported the investment, driving gross margin improvements across the Group.

In a lower growth environment, expenses were well controlled to deliver an 8.2% EBIT growth. As planned, inventory and net debt are normalising with further inventory reductions and cash inflow forecast for 2H24.

We enter 2H24 in a solid position with our NPD pipeline continuing to release, new markets maturing, our solutions offering developing, and cost pressures well managed. We expect to deliver EBIT growth of 5.0% to 7.5% for FY24. ..."

 

[Dona Ferentes]

when the P/E is in the 30's, then insipid numbers don't cut it. Breville hardly grew ... today's trading is down 10 per cent

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The coffee machine market can't grow too much more.. It was inspired to introduce Vertuo , a x2 pod machine for double shots. But this isn't everyone's cup of tea.

 

[Dona Ferentes]

and then, a 10+ per cent selloff on the day allows others to buy in.

They do sell weighing machines

 

[Dona Ferentes]

there's money in gadgets.

• Record sales year with revenue of over $1.5bn, more than doubling over the last 5 years
• Full year revenue growth of 3.5% with a marked strengthening in 2H24 led by double-digit revenue growth in the Americas, EMEA and the Coffee category in the Global Product segment
• Gross Profit grew by 7.7% with Gross Margin improving 140bps
• EBIT growth of 8.0% to $185.7m, above top end of guidance given in February 2024
• NPAT growth of 7.5%, after reversion of effective tax rate to 28.5% (pcp 27.0%)
• Net cash position achieved with strong cash inflow of $174.9m substantially driven by inventory levels returning to equilibrium, whilst Gross Margin increased
• Dividend of 33.0c cents per share (100% franked)
• Revenue, Gross Profit and EBIT have all increased every year since FY15

•

 

[Dona Ferentes]

Breville have introduced a top of the line coffee machine, the Oracle Jet. Cost is $3699

this is part of of a review that comes from John Davidson:

"Like most Breville machines, coffee from the Jet starts off excellent, and only gets better as you tweak how coarse or fine you grind the coffee until you get a brew time that suits your tastes.

Speaking of grinding the coffee, here’s another word to describe the Oracle Jet: semi-automatic.

Like most Breville espresso machines, the Jet has a built-in grinder that is loosely coupled to the machine’s software platform, in the sense that the machine knows what grind setting you’ve chosen, but will never select that grind setting for you the way a fully automatic machine might.
If you grind the coffee beans too coarsely, the machine will still pull a shot with the volume of liquid you requested, but at the end it will pop up a warning on the screen, telling you that the time taken to produce that volume wasn’t enough, and that you should try adjusting the grind size to such-and-such a setting.

It does the same thing when you’ve chosen too fine a grind setting, and choked the machine. It will tell you the brew time was too long, and suggest a new grind size...."

The Oracle Jet has a touchscreen, and runs on the Android operating system.

 

[Bellcose]

My six cup Moka Pot cost $50 and a large take-away costs $5.80. I reckon I'm ahead and will be for quite some time. Pass on the Breville Oracle Jet.

 

[Dona Ferentes]

"Now that Trump has won the US Presidential election, the near-term risk of material tariff increases on consumer goods coming out of China has solidified"
- Jim Clayton, CEO, Breville Group Ltd