Shares in New Zealand-based beauty products business Trilogy International Ltd (ASX: TIL) are down 2% in morning trade after it reported its financial results for the six-months ending September 30 2017.
Below is a summary of the results with comparisons to the prior corresponding half-year period. All figures in NZ dollars.
- Revenue of $49.7m, up 4%
- Net profit of $4.1m, up 17%
- EBITDA (operating income) of $6.3m, down 12%
- EBITDA profit margin of 12.7%, down from 15%
- Earnings per share flat at 5 cents
- No interim dividend
- 3 months' contribution from Lanocorp acquisition delivered $3.1m revenue and EBITDA of $0.7m
- Guidance for FY18 revenue and EBITDA to come in at 10%+
The business behind the ECOYA, Goodness Natural Beauty, Trilogy, Tiaki and Lanocreme natural beauty brands, among others, blamed the falling EBITDA and margins on "softer trading conditions", marketing investments, higher manufacturing costs and a weaker New Zealand dollar.
Trilogy's subsidiary CS Company that distributes beauty products in New Zealand delivered around half of all revenue at $23 million, with no half-on-half growth in a result also blamed on soft consumer spending and changing supplier agreements mixes.
The international business is still growing strongly, albeit off a small base and much of the company's growth prospects rest on the success of overseas sales.
The group boasted over the second half of the fiscal year that it will add over 1,000 "additional doors" in the UK and US with the crucial Christmas and summer trading months set to have a big impact on whether it meets its ambitious full year guidance.
Today the dual-listed stock sells for A$2.19, with the NZ scrip selling for NZ$2.45 or 13.6x trailing diluted earnings per share of NZ18 cents.
The company is relying on a much improved second half of the year to meet its forecasts which is why investors have sent the stock 5% lower in early trade. It may remain volatile over the 6 months ahead.
Another business in this space growing via an aggressive acquisition strategy with hopes of overseas success is BWX Limited (ASX: BWX) as the group behind the Sukin natural skincare brand. Analysts at Goldman Sachs recently slapped a bullish price target of more than $9 on the business in labeling it a "conviction buy".
