Breville share price rockets 15% amid surging FY23 earnings

ASX 200 electrical appliance manufacturer Breville reported a 17% year on year increase in earnings.

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The Breville Group Ltd (ASX: BRG) share price is going through the roof on Monday.

Shares in the S&P/ASX 200 Index (ASX: XJO) electrical appliance manufacturer closed on Friday trading for $23.15 each. At the time of writing, shares are swapping hands for $26.60 each, up 14.9%.

For some context, the ASX 200 is down 0.16% at this same time.

Investors are bidding up the Breville share price following the release of the company's full-year results for the 12 months ending 30 June (FY23).

Here are the highlights.

Breville share price soars on 17% earnings lift

What else happened during the year?

Among other key metrics that look to be supporting the Breville share price today is the 6.4% FY23 gross profit growth. The second half of the year was particularly strong, posting 10.6% growth in gross profits. The company reported that gross margins strengthened as it recovered inflationary costs and promotions were well controlled.

Breville also worked to reduce its inventory, which built up during FY22 amid supply concerns. Core inventory managed was down $97 million year on year through reduced purchases in the second half, rather than discounted sales. The ASX 200 appliance manufacturer expects to reduce its inventory further in FY24.

Seasonal cash inflow in 2H23 was $91 million, while the full year saw outflows of $117 million. This was primarily due to Breville's acquisition of Italian specialty coffee company Lelit.

The company's full-year dividend payout works out 30.5 cents per share, up from 30 cents per share in FY22. This reflects management's target payout ratio of 40% of earnings per share (EPS).

At the current Breville share price, that equates to a yield (partly trailing and partly yet to be paid) of 1.2%.

Eligible investors can expect to receive the final 15.5 cents per share payout on 5 October.

What did management say?

Commenting on the result sending the Breville share price rocketing today, CEO Jim Clayton said:

A solid year of performance for the Group, delivering guidance once again, against a challenging and dynamic backdrop with a subdued consumer, inflationary headwinds, a strong denominator, and retailer destocking…

We managed margins well, demonstrating the pricing power of our premium products, and commercially chose to manage down inventory through reduced purchases rather than off-brand discounting. In a lower growth year, expenses were moderated to reliably deliver EBIT at the top end of our guidance.

What's next?

Looking to what could impact the Breville share price in the year ahead, the ASX 200 company said the outlook is similar to FY23.

That means we can expect to see "macro headwinds playing against company-specific tailwinds". These include new product launches, maturing new geographies, solution plays, and cost improvements.

Citing ongoing uncertainty, management noted its expense budget "is again set with flexibility to deliver EBIT growth under a range of probable revenue scenarios".

"We enter FY24 in a solid position with our NPD pipeline continuing to release, new markets maturing, our solution offering developing, and cost pressures moderating," Clayton said.

Amid an easing supply chain environment, Breville is expecting to reduce its net debt.

Breville share price snapshot

The Breville share price has been a standout performer so far this calendar year.

Since the opening bell on 3 January, shares in the ASX 200 company have gained 43%.

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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