GCISupreme Delivers Record H1 Results and Upgraded FY25 Guidance
Consumer stocks are polarising into the haves & have nots. Those whose products offer the right blend of quality and affordability are doing well. Whereas many others are struggling to satisfy the more budget conscious tastes of cash strapped households.
So what about - a leading UK brand owner, licenser and distributor of FMCG products across vaping, soft drinks, sports, nutrition, batteries and lighting?
Well from today’s record Sept H1 results and upgraded FY’25 guidance, the company operates squarely in the winners circle.
Here H1 turnover (+8% to £113m), gross margins (+3%, 30%), adjusted EBITDA (+22%, £18.5m), PBT (+25%, £14.7m) and EPS (+37%, 11.1p) all climbed on the back of robust performances (see below charts) from lighting, drinks, sports & nutrition, batteries and branded distribution (re Elfbar & Lost Mary). Largely on the back of further market share gains, lower input cost inflation (eg raw materials & freight), favourable forex and economies of scale. The fly-wheel is working.
Elsewhere, cashflow was strong too (OCF £11.3m) with net funds (pre IFRS 16) closing Sept’24 at £2.3m. Enabling the Board to hike the interim dividend by 20% to 1.8p, even after purchasing Clearly Drinks for £15.6m in June.
Looking ahead, trading remains positive heading into the busy Xmas season. Which when combined with the better-than-expected 1st half, means that FY’25 Adj EBITDA guidance has been upgraded to £40m (vs £37m B4) on turnover of £240m – of which >£100m is non-vape related.
Further out, the group is well prepared for not only the ban on single-use vapes on 1st Jun’25, but also the introduction of a new vaping tax in Oct’26 along with higher employers’ NI (Est £0.9m pa impact) from 1st Apr’25.
As such, I have lifted my fair value from 225p to 240p/share this morning, with the stock (at 174p) trading on modest 5.0x EV/EBITDA and 7.5x PE multiples, alongside paying a 3%+ dividend yield. CEO
Sandy Chadha commenting: “We have experienced steady growth across our categories whilst seamlessly diversifying our portfolio through the acquisition of Clearly Drinks. Adding well-recognised and trusted brands into Supreme’s unrivalled distribution network across UK retail is central to our long-term growth strategy, and this acquisition reaffirms our ability to identify and execute quickly on M&A opportunities."
"The strength of our strategy and the proactivity of our teams means we are well-positioned for upcoming changes in the UK vaping sector. Non-disposable vapes account for the majority of our vaping revenue, and we continue to report growth in 10ml e-liquid refills. Looking forward, we are expecting trading to be ahead of market expectations for March FY25."
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