Breville Group Ltd (ASX: BRG) shares are lifting after the company announced an update on its business and provided guidance for FY21 at today’s annual general meeting (AGM). At the time of writing, the Breville share price is trading 1.3% higher at $26.46.
Highlights from the AGM
Breville delivered some key numbers for FY20:
- 25.3% increase in top line revenue to $952 million.
- Earnings before interest and taxes (EBIT) grew by 14.3% to $113 million after normalising one-off expenses incurred due to COVID-19.
- Net profit after tax (NPAT) on a normalised basis increased by 11.2% to $75 million
- Dividend for the year grew 10.8%, tracking growth in NPAT.
The appliance company also mentioned the successful acquisition of Baratza, a designer and distributor of premium coffee grinders, in October.
Guidance for FY21
Breville also issued an outlook for FY21, with a caveat that it won’t have a clear visibility of its numbers until January 2021 due to prevailing uncertainties. However, assuming no significant change in market conditions, Breville expects EBIT for the full year of FY21 to be consistent with the market’s current consensus forecast range of $128 million to $132 million.
A brief look at Breville
Breville is a well-known Australian designer and manufacturer of small appliances such as blenders, coffee machines, juicers and mixers. It owns popular brands such as Kambrook, Ronson, Sage, Solis, Gastroback, Stollar, Catler, Bork and Riviera & Bar.
Breville positions its brands at the premium end of the market. The company’s brand strength is particularly prominent in North America and Europe, where it enjoys a substantial price premium to competitors, and where retail pricing is routinely up to 30% higher than in Australia.
In Australia ironically, Breville does not benefit from the same pricing premiums it commands in North America and Europe. While its domestic pricing is still at the upper end of the market, it doesn’t command an additional premium against high-end competitors such as De’Longhi and KitchenAid.
As the company’s products are priced at the top end, management has acknowledged that Breville’s business is exposed highly to the economic cycle, and a downturn could lead to consumers opting for cheaper alternatives that would erode its margins.
How the Breville share price has performed in 2020
The Breville share price has climbed up by almost 50% this year, rising from $17.46 in January to $26.46 at today’s trading. The company has benefited from the COVID-19 lockdowns as more people working from home buy small appliances like coffee machines and blenders. Breville commands a market cap of $3.6b billion.
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