Supreme lifts expectations after solid first half
By Josh White
Date: Tuesday 26 Nov 2024
(Sharecast News) - Vaping and fast-moving consumer products specialist Supreme reported an 8% improvement in revenue in its first half on Tuesday, to £113m.
The AIM-traded firm said adjusted EBITDA grew 22% to £18.5m, reflecting higher gross margins across all categories and disciplined cost control.
Adjusted pre-tax profit increased 25% to £14.7 million.
The company declared an interim dividend of 1.8p per share, up 20% from the prior year, adding that it remained bank-debt free with access to more than £50m in unused borrowing facilities.
Operating cash flow improved significantly, to £11.3m from £0.4 million a year earlier.
Supreme said its acquisition of Clearly Drinks, a UK-based manufacturer of bottled spring water and soft drinks, for £15.6m, was a key highlight.
The board said the acquisition, financed entirely from the company's cash reserves, was expected to add £3.5m in annualised EBITDA and diversify the company's portfolio, with non-vape revenue now exceeding £100m, or 45% of group revenue.
It also completed the final phase of its relocation plan, consolidating its operations at the 'Ark' facility, which now served as Supreme's administrative headquarters.
Looking ahead, Supreme said it expected its performance for the 2025 financial year to exceed market expectations, with revenue projected at around £240m and adjusted EBITDA of at least £40m.
Despite upcoming regulatory changes, including a vape tax planned for 2026 and increases in National Insurance and the National Living Wage, Supreme said it was well-positioned to navigate these challenges.
"I am pleased to report another strong period of trading for Supreme - we have experienced steady growth across our categories whilst seamlessly diversifying our portfolio through the acquisition of Clearly Drinks," said chief executive officer Sandy Chadha.
"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 merger and acquisition 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."
Chadha noted that non-disposable vapes accounted for the majority of the company's vaping revenue, adding that it continued to see growth in 10ml e-liquid refills.
"Looking forward, we are expecting trading to be ahead of market expectations for the current financial year and the board is confident that Supreme is well positioned to deliver ongoing profit growth and shareholder value."
At 1009 GMT, shares in Supreme were down 0.11% at 173.81p.
Reporting by Josh White for Sharecast.com.
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