In This Article:
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Revenue: Nutrition division revenue down 7.5% in H1.
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FX Impact: GBP5 million profit hit due to FX volatility, particularly in the Japanese yen.
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Average Selling Prices: Down 12% on a constant currency basis due to rebrand discounts.
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Net Debt: Increase in net debt at the half year, noted as transitory.
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Free Cash Generation: Stronger than the prior year, despite GBP20 million in acquisitions.
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CapEx: Expected to be materially lower in the second half and next year.
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Online Retail Sales Growth: Over 40% growth in H1.
Release Date: September 17, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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The beauty and ingenuity divisions delivered record performance, showing strong momentum.
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More contract wins and positive progress in the ingenuity division.
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Localized manufacturing initiatives are reducing reliance on FX volatility.
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Rebranding efforts are expected to drive significant growth in offline markets.
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Strong free cash flow generation in the core business, with expectations of improved performance in 2025.
Negative Points
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Nutrition division faced significant headwinds, including a GBP5 million profit hit from FX volatility.
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Rebranding efforts led to a 12% decline in average selling prices, impacting revenue.
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Increased net debt at the half-year mark, although considered transitory.
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Commodity price volatility, particularly in whey pricing, poses challenges.
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Potential risks and uncertainties surrounding the planned demerger of the ingenuity business.
Q & A Highlights
Q: Can you explain what went wrong with the rebranding of the Nutrition division? A: The rebranding process was initiated when the momentum was strong, but unforeseen market challenges, such as currency volatility and commodity price fluctuations, impacted the execution. The decision to rebrand was made well in advance, and once initiated, it had to proceed despite these headwinds. The rebrand affected average selling prices due to the need to manage existing stock alongside new products, which created a less optimal customer experience on the website. (Matthew Moulding, CEO)
Q: How will the recent 10% improvement in the Japanese yen affect your financials? A: The recent improvement in the yen is a positive tailwind for us, but its full impact will likely be seen next year. We have localized sourcing in Japan through third-party manufacturers, which helps mitigate some of the currency volatility. (Matthew Moulding, CEO)
Q: What are the risks that could prevent the demerger of Ingenuity from happening? A: While we have strong stakeholder support and the necessary infrastructure in place, there is always a risk until the process is finalized. Ingenuity is a substantial business with significant revenue and EBITDA, and it can stand alone with its own banking and funding facilities. (Matthew Moulding, CEO)