Tariff Pressures Test Breville’s Margin Resilience Amid Record Sales
Breville Group Limited has reported a record half-year revenue of $1.1 billion for the six months ended December 2025, alongside modest profit growth and a raised interim dividend.
- Record half-year revenue up 10.1% to $1.099 billion
- Net profit after tax rises modestly by 0.7% to $98.2 million
- Gross margin contracts to 35.4% due to US tariff impacts
- Operating expenses increase 10%, driven by headcount and wage inflation
- Interim dividend raised to 19.0 cents per share, fully franked
Record Revenue Growth Despite Margin Pressure
Breville Group Limited has delivered a standout performance for the half-year ended 31 December 2025, posting record revenue of $1.099 billion, a 10.1% increase on the prior corresponding period. This milestone underscores the company's continued momentum in the competitive small domestic appliances market, driven by strong sales across its Global Product and Distribution segments.
However, the company’s gross margin contracted to 35.4% from 36.7% a year earlier, primarily due to the impact of US tariffs. While gross profit still grew by 6.3% to $389.5 million, the margin squeeze highlights ongoing cost pressures that Breville will need to manage carefully moving forward.
Profit Growth and Expense Dynamics
Operating expenses rose by 10% to $243.6 million, reflecting increased headcount from geographic expansion and wage inflation. Despite these cost increases, Breville managed to grow earnings before interest and tax (EBIT) by 0.7% to $145.8 million, in line with expectations. Net profit after tax also edged up 0.7% to $98.2 million, maintaining steady profitability amid a challenging cost environment.
Notably, the company improved its net debt position to $43.6 million from $55.1 million in the prior period, supported by strong operating cash flows and disciplined capital management. Inventory levels decreased slightly, indicating efficient working capital management despite the seasonal sales peak during the holiday period.
Dividend and Segment Performance
The Board declared a fully franked interim dividend of 19.0 cents per share, up from 18.0 cents in the previous corresponding period, signalling confidence in the company’s cash flow and earnings stability. The dividend will be paid on 27 March 2026, with an ex-dividend date of 11 March.
Breville’s two operating segments showed robust contributions – the Global Product segment, featuring premium in-house brands like Breville, Sage, Baratza, and LELIT, generated $973.6 million in revenue, while the Distribution segment, which sells third-party designed products under various brand agreements, contributed $125.1 million. Geographically, the Americas region remains the largest revenue driver, followed by APAC and EMEA.
Outlook and Market Positioning
While the half-year results reflect solid top-line growth and disciplined cost control, the margin impact from US tariffs poses a strategic challenge. Breville’s ability to innovate and expand its premium product offerings will be critical to offsetting these headwinds. The company’s investment in capitalised development costs and tooling, which increased during the period, suggests a focus on sustaining product leadership.
With a strong balance sheet, improved net debt, and a raised dividend, Breville appears well-positioned to navigate the evolving global trade environment and consumer demand trends. Investors will be watching closely how the company manages inflationary pressures and tariff risks in the second half of the fiscal year.
Bottom Line?
Breville’s record revenue and steady profits mask margin pressures from tariffs, setting the stage for a critical test of cost management and innovation in 2026.
Questions in the middle?
- How will Breville mitigate ongoing US tariff impacts on margins?
- What is the outlook for operating expenses amid wage inflation and geographic expansion?
- Can the Global Product segment sustain growth to offset Distribution segment challenges?
