BRG - Breville Group

[greggles]

Good result for BRG, Australia particularly strong, but all segments growing. Been a very strong performer in my SMSF.

Another good result today. FY18 results were announced and beat expectations.

Revenue grew 7.7% to $652.3 million while EBITDA grew 11.6% to $100.2 million. Net profit after tax was $58.5 million, up 8.7% from the previous year. The company declared a final dividend of 16.5c per share, 60% franked, bringing the total dividend to 33c per share, 60% franked, an increase of 8.2%.

The BRG share price finished the day at $13.10, up 12.54%.

 

[galumay]

I sold out earlier in the year, price got too far ahead of my range of intrinsic value so I followed my strategy and sold. Its certainly a solid business!

 

[greggles]

Impressive Half Year Ended 31 December 2018 financial result for BRG. After declining from $14 to around $10.25 in the last four months of 2018, the BRG share price has spiked again and is now trading at $14.22, up 19.10% on yesterday's close and currently at all-time highs.

 

[finicky]

Discretionary spending Armageddon!
Continuing expansion into Europe - revenue there up.60%
Able to spend more on marketing and R&D which is allocated as % of net sales

Disc: not held

Breville Group Limited (BRG) Results
Half year ended 31 December 2019

Revenue increase of 25.4% to $552.0m

EBIT2 increase of 15.6% to $72.0m

Interim dividend increased to 20.5 cps (60% franked)

• Pleasing first half results with strong revenue growth, continued successful geographic
expansion, double-digit EBIT growth and a normal seasonal pattern to cashflow
• Double-digit revenue growth in all regions and categories in the Global Product segment, with
revenue growing +20.3% in constant currency
• Continued double-digit EBIT growth, +15.6% pa on a comparable basis (excluding AASB 16
impact)
• EBIT margin2 at 13.0% primarily reflects the dilutive effect of strong USD, and, partially, higher
growth in our lower margin Distribution segment, and partially the net impact of tariffs in the USA
• NPAT increase of +14.1%
• Normal seasonal cashflow with peak receivables following holiday season sales
• ROE of 22.6% showing continuing strong return on organic growth investments
• Interim dividend of 20.5 cents per share (+10.8%), 60% franked, has been declared

 

[galumay]

One I should not have sold, i thought its price had run too far ahead of range of fair value and sold at $11 a couple of years ago. I should have realised that my valuation was out of date and better understood the drivers of the business. Lesson learnt, I hope!

 

[finicky]

Someone on a forum a year or two ago, maybe whimsically, described this as the CSL of kitchen appliances.
I've wanted to add it for a long time but seemed a bit pricey to me too.

 

[Dona Ferentes]

Someone on a forum a year or two ago, maybe whimsically, described this as the CSL of kitchen appliances.
I've wanted to add it for a long time but seemed a bit pricey to me too.

In a Trading Halt, awaiting a Capital Raising (like many)(boost balance sheet, or acquisitions?)

Breville Half-yearly on 13 Feb put a bullet under the price, but it quickly sold off, gained speed in March with Covid-19 panic, and quickly bounced back. Solid support since then, due to "iso-spending" ?

I didn't realise how big the company was in N Am. Also the Nespresso link-up has been a winner

The outlook mentions increased spending on marketing and R&D as a percent of net sales, which is a reality in competitive markets. And I wonder how the supply lines are, seeing most of their product range is "medium level complexity ex-China".

 

[Trav.]

BRG doing well up 3.6% today. I will be happy for it to break $28.84 and then any more is a bonus.

Holding @ $25.94

 

[galumay]

One I should never have sold. Oh well, a profitable mistake, just a lot of potential profit missed.

 

[Trav.]

I will be happy for it to break $28.84 and then any more is a bonus.

Another good day today, high of 29.01 but didn't hold, maybe we will have another go tomorrow.

 

[Trav.]

I will be happy for it to break $28.84 and then any more is a bonus.

Well I played it safe here and took profits on Friday...

WHY ?

ATH made on Friday $29.95
Very nice profit made and happy to bank
and lastly - Daily chart showed a possible W3 completion at a Typical price of $29.04

So I will be watching to see if it retraces then go back for another bite

 

[peter2]

Hi @Trav. Looks a nicely structured short term trade. Rinse, repeat for the next 100 trades. Seems like a good plan.

 

[Dona Ferentes]

Breville Group Limited (ASX: BRG) has entered into an agreement to acquire 100% of the Italian-based prosumer specialty coffee group, LELIT, effective 11 March 2022 AEST.

LELIT’s range of espresso machines and grinders, together with the Baratza range of grinders, creates an increasingly strong presence in the specialty coffee channel while providing LELIT with an immediate opportunity to strengthen its presence outside of Europe.

Breville will acquire 100% of the LELIT group from the founders and current owners on a cash and debt free basis for a total consideration of approximately €113m, subject to customary settlement adjustments. Half of the consideration will be paid in cash and half by the issue of fully paid ordinary shares in BRG priced at A$27.64 per share which will be subject to a five-year trading lock post completion. The cash portion will be funded from existing cash reserves and debt facilities.

..........................
prosumer - haven't encountered that neologism before

 

[Dona Ferentes]

One I should never have sold. Oh well, a profitable mistake, just a lot of potential profit missed.

But BRG has been on a bit of a slide recently, dropping from well above $30 at the start of 2022 to just $20 today.

Very much a global company, and one of the few to make the transition, but it is still in the category of consumer discretionary and subject to whims and the power of the purse-strings

The company reaffirmed its earnings guidance earlier in May, saying there had been no significant change in economic conditions in its major markets, new product launches were performing well, and its supply chain was functioning well.

Breville also stated its global revenue opportunity was $9.7 billion, or nine times its current annual revenue.

But the current PE is still at 26 times (was nearer to 50 only five months ago).

Delonghi, the Italian appliance manufacturer which competes with Breville in global markets, is valued at an earnings multiple about half the level of Breville.

 

[Dona Ferentes]

Breville Group has reconfirmed that it expects full-year 2022 earnings before interest and tax to be in line with previous guidance and market consensus of about $156 million.

- and that has only stabilised the fall this CY, to just over $18. Probably coming out of lockdowns to 'normal' trading conditions?

 

[Dona Ferentes]

In for the long term:

We recently initiated a position in Breville Group, which is a kitchen appliance company operating premium brands in the cooking, beverage and food preparation categories. The business was founded in 1932, maintains a heavy focus on product innovation and has very strong global distribution which should provide for further profit growth. Breville Group has a long history of excellent financial discipline delivering strong returns for shareholders.

- Australian Foundation Investment (AFI)

 

[galumay]

Late to the party IMO!

 

[Belli]

AFI's little sibling (MIR) has around $11m in Breville. I understand it has held it for a number of years. AFI plonked only $15m into it. Bugger all really since it holds over $128m in cash alone as at 31 Dec.

 

[finicky]

An article on livewire by R Montgomery (he cares for you, the non cllent) alleges opportunity in BRG after something like a 40% drop in price since its peak. Says at $20.20 its at his intrinsic valuation (its now @ $20.60); still seems expensive to me.
The monthly chart is consolidating unconvincingly I think, with downstrokes nullifying upstrokes and if my memory serves me well this pattern is more likely to resolve to the downside when preceded by a downtrend.
BRG is in the top 10 of shorted ASX stocks.

After losing its froth, is Breville a ‘buy’ once more?

I'm impressed by Breville Group management, approach & execution. Is there an opportunity to buy a quality business at an attractive price?

www.livewiremarkets.com

Not Held

MONTHLY

 

[Dona Ferentes]

AFI's little sibling (MIR) has around $11m in Breville. I understand it has held it for a number of years. AFI plonked only $15m into it. Bugger all really since it holds over $128m in cash alone as at 31 Dec.

From AFI 2023 annual report:

One new stock was added through the year. We initiated a position in Breville Group, which is a kitchen appliance company operating premium brands in the cooking, beverage and food preparation categories. The business was founded in 1932, maintains a heavy focus on product innovation and has very strong global distribution which should provide for further profit growth . BRG has a long history of excellent financial discipline delivering strong returns for shareholders.