Breville appears to be bucking the trend in the appliance market, with a 3.5% increase in revenue and a 7.7% increase in gross profits, sales in Australia and Asia Pacific fell by 6.4% while US revenues climbed 2.9%, the growth was delivered because of coffee demand while the fall in revenues in some markets was driven by a falloff in cooking demand.
The Australian business has delivered record sales year with revenue of over $1.5bn, more than doubling over the last 5 years.
Recently Breville CEO Jim Clayton’s contract was renewed with his base salary lifted to $1.85M He will also get both long term and short-term incentive increases.
The business delivered EBIT growth of 8.0% to $185.7m, above top end of guidance given in February 2024. while also experiencing strong cash inflow of $174.9m substantially driven by inventory levels returning to normal levels.
Gross margins also increased.
Breville Group CEO, Jim Clayton said that the Company delivered “A solid year of performance with a marked strengthening in the second half”.
He said that there were encouraging signs of strengthening in the second half with double-digit revenue growth in the Americas and EMEA, double-digit growth in Coffee, and an improving performance in our direct countries in the APAC Theatre.
Overall, the strength of their new product launches, expansion of new markets and the continuing coffee tailwind supported their top line growth as cost-of-living pressures and mean reversion weighed on the business.
Savings in input costs were partially reinvested into promotional program, but only where ROIs supported the investment, driving Gross Margin improvements across the Group.
Clayton claimed “We enter FY25 with some momentum on the top line, our NPD pipeline continuing to release, new markets outperforming and our solutions offerings developing. We will continue to plan inventory for accelerated growth, whilst at the same time managing costs to protect against downside risks”.
The Companies Global Product segment grew revenue by 4.4% and Gross Profit grew by 6.9%. 2H24 revenue growth was markedly stronger at 8.7% (or 7.1% in constant currency) as Coffee delivered double-digit growth and Cooking and Food Prep slowed their rate of decline.
In the Global Product category, the business witnessed strong demand from the Barista Touch Impress, the Vertuo Creatista, the ParadiceT Food Processors and the InFizz range.
“After a quiet period during Covid, new product launches are firing with a healthy pipeline in place for FY25” management claimed.
Gross Profit grew by 16.1% as Gross Margin improved, and Gross Profit growth was prioritised over revenue in this segment.
The APAC region which includes Australia saw a full year revenue decline of (6.4) %.
Despite the fall the business claims that they are seeing good signs of 2H24 recovery in Australia, New Zealand and South Korea, with the Coffee category, delivering second half growth across the three markets combined.
Like most competitors’ employment expenses grew by $13.5m driven by the team earning 100% STI (short term incentive) payout as opposed to 58% in the PY. Like-for-like headcount was relatively stable and other expenses, collectively, were flat year-on-year.
Spend on the investment functions of marketing, R&D, technology services and solutions increased to 14.0% of sales from 13.1% in the prior year.
Management claim that the financial year ahead resembles FY24, with macro headwinds and uncertainty playing against company specific tailwinds, including new product launches, fast growing new geographies and solution plays, as well as some degree of 2H24 sales strengthening.
“It is too early to predict how these forces will play out across the whole year, but our expense budget is again set with flexibility to deliver EBIT growth under a range of probable revenue and cost scenarios”.
