Spending so much more time at home throughout the pandemic, all over the world people have been ditching the $5 coffees to make their own cafe-quality brews at home evidenced by raging sales of Breville’s (ASX: BRG) cafe-quality machines which have driven a 23.6% increase in revenue.
Of all the things we’ve been doing while in lockdown, buying kitchen appliances might not have been the first thing that comes to mind but the appliance manufacturers has overcome global logistical challengers to report $878.7m revenue for the 6 months ended 31 December 2021, a 23.6% increase on the previous year.
Similar growth was seen at the bottom line with Breville delivering a 25.1% increase in net profit after tax to $77.7m to declare a 15c fully franked interim dividend, up from the previous 13c distribution.
“Sustained consumer demand across geographies and categories underpinned our 1H22 performance,” said Breville CEO, Jim Clayton.
“The business continued its move from strength to strength delivering 23.6% sales growth, despite a strong prior period and global logistical constraints (most acute in the US); double digit EBIT growth with continued investment in mid-term growth drivers; and, an improved inventory position, which we plan to further reinforce in the 2H to support growth in the 1H23”.
EMEA (Europe, Middle East and Africa) emerged as Breville’s biggest region for growth, logging a 39.4% increase in sales with Asia Pacific rising 22% followed by the Americas with 17.1%.
Moving with the times, Breville has flagged its increased investment in its digital footprint as a driving force for its emergence as much more than just a kitchen appliance manufacturer.
Coffee machines have been the best performing segment of the business where it has established a consumer-centric experience where they can be purchased in bundles that include freshly roasted beans delivered for a year, as well as ongoing training and support to produce that barista-quality from the comfort of home.
Going as far as to distance themselves from a negative perception in the current economy, Breville stressed in its investor presentation that they are NOT a retailer, in response to the retail sector’s downturn. Unlike retailers, the Company notes that inventory on hand is good for Breville, claiming its stock does not age over time.
Further emphasising their position as a lifestyle company, Breville has increased its branding awareness to focus on delivering outcomes to households rather than products.
Alfred Chan is an Analyst at Emerald Financial, specialising in ASX-listed small cap companies.
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