Breville Group Ltd cooks up more growth for investors

This morning kitchen appliance business Breville Group Ltd (ASX: BRG) reported its financial results for the year ended June 30 2018. Below is a summary of the results with comparisons to the prior year.

  • Net profit of $58.5m, up 8.7%
  • Revenue $652.3m, up 7.7%
  • EBIT $86.9m, up 10%
  • Earnings per share 45c, up 8.7%
  • Dividend per share 30c (60% franked)
  • Final dividend of 16.5cps
  • Return on equity 21.6%
  • Cash in hand of $58m

This was another successful year for one of Australia’s best retailers with the group’s North American business the star performer as it grew revenues 16.3% on a constant currency basis to $303.6 million, with Australia and New Zealand growing revenue a respectable 9.1%.

The group sells high-end kitchen appliances and as such margins are key with total EBIT margin rising 30 basis points to 13.3%.

Key to maintaining those margins is delivering best-in-class products for items that are surprisingly essential for most developed world consumers. Breville’s core products include kitchen essentials such as toasters, kettles, coffee makers, juicers, microwaves and blenders, which are less discretionary than the products of apparel retailers for example.

The stock is up around 16% over the past year and changes hands for 26x earnings per share at $11.64 today. Solomon Lew’s Premier Investments Limited (ASX: PMV) also owns a substantial stake in Breville and it’s a business that ticks a lot of boxes such as balance sheet strength, dividends, and growth.

The main issue is the valuation. For now I’d rate it a hold and one for the watch list.

Breaking news: ASX companies set to raise dividends!

It's been a nail-biter of a reporting season here in the first half of 2018.

But the real action, in my opinion, is what companies are doing with dividends.

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Motley Fool contributor Tom Richardson has no position in any of the stocks mentioned.

You can find Tom on Twitter @tommyr345

The Motley Fool Australia owns shares of and has recommended Premier Investments Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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