Breville’s Rising Costs and Inventory Pose Questions Despite Profit Jump
Breville Group Limited reported a robust half-year performance with a 10.1% rise in revenue to nearly A$1 billion and a 16.1% jump in net profit, underpinning confidence in its premium appliance strategy.
- Total sales revenue up 10.1% to A$997.5 million
- Net profit after tax rises 16.1% to A$97.5 million
- EBIT grows 10.5% to A$144.8 million
- Interim dividend increased to 18.0 cents per share, fully franked
- Net debt reduced significantly to A$55 million
Strong Revenue and Profit Growth
Breville Group Limited has reported a solid financial performance for the half-year ended 31 December 2024, with total sales revenue climbing 10.1% to A$997.5 million. This marks a record half-year revenue for the company, driven by resilient consumer demand across its premium small appliance portfolio.
Net profit after tax surged 16.1% to A$97.5 million, outpacing revenue growth and reflecting operational efficiencies alongside lower interest expenses due to reduced borrowings. Earnings before interest and tax (EBIT) also rose 10.5% to A$144.8 million, underscoring the company’s effective cost management and margin maintenance.
Segment Performance and Geographic Reach
The company’s 'Global Product' segment, which includes its flagship Breville®, Sage®, Baratza®, and LELIT® brands, accounted for the majority of revenue at A$877.7 million, up from A$782.8 million in the prior corresponding period. This segment maintained a healthy gross margin of 37.4%, slightly down from 38.1% previously but consistent with the company’s premium positioning.
The 'Distribution' segment, which sells third-party designed products under various brand licenses, contributed A$119.8 million in revenue, a slight decrease from the previous period. The Americas region remained the largest contributor, with notable growth in EMEA and APAC markets supporting the overall revenue increase.
Operational Highlights and Cost Management
Operating expenses rose 10.2% to A$221.5 million, in line with revenue growth. Employee benefits expenses increased by 5.6%, reflecting wage inflation and geographic expansion, while advertising and marketing spend jumped 20.9%, signaling a strategic push to bolster brand presence globally.
Depreciation and amortisation expenses increased by 16.2%, driven by capitalised development costs and investments in tooling and software, highlighting ongoing innovation efforts. Despite these cost increases, the company maintained a stable gross margin of 36.7%, consistent with the prior period.
Balance Sheet and Dividend Update
Breville’s balance sheet strengthened with net debt reduced to A$55.1 million from A$97.5 million a year earlier, supported by strong cash flow generation. Inventory levels rose to A$443.4 million, primarily due to tactical re-phasing of inventory purchases in the USA, positioning the company for anticipated demand.
The board declared an interim dividend of 18.0 cents per share, fully franked and up from 16.0 cents in the previous corresponding period, reflecting confidence in ongoing earnings momentum. The dividend reinvestment plan will not operate for this interim dividend.
Looking Ahead
Breville’s half-year results demonstrate the resilience of its premium appliance strategy amid a competitive consumer goods landscape. The company’s focus on innovation, geographic expansion, and disciplined cost management has underpinned its strong financial outcomes. Investors will be watching closely how Breville navigates supply chain dynamics and evolving consumer preferences in the second half of the fiscal year.
Bottom Line?
Breville’s robust half-year growth and strengthened balance sheet set a confident tone, but sustaining momentum amid global market shifts remains the key challenge.
Questions in the middle?
- How will Breville manage inventory levels amid ongoing supply chain uncertainties?
- What impact will increased marketing spend have on brand penetration and sales growth?
- Can Breville sustain margin stability as it expands in competitive international markets?
