The S&P/ASX 200 Index (ASX: XJO) share Breville Group Ltd (ASX: BRG) recently reported its result and investors were impressed by what they saw.
Breville reported that in the first six months of FY26, revenue grew by 10.1% to $1.1 billion, gross profit rose 6.3% to $389.5 million, operating profit (EBITDA) rose 2.9% to $182.8 million, earnings before interest and tax (EBIT) rose 0.7% to $145.8 million, net profit increased 0.7% to $98.2 million and the dividend per share was increased 5.6% to 19 cents.
The coffee machine and coffee bean business guided that it expects FY26 EBIT to see a "slight increase" compared to FY25, which is ahead of what the market was expecting, though it was in line with what broker UBS expected.
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What did UBS think of the ASX 200 share's result?
The broker said that global product revenue growth of 10.9% was "strong" and led by 'direct' countries and the coffee categories.
Direct countries grew revenue by double-digits, while the coffee segment also grew by double-digits.
UBS also noted that US tariffs have been a key concern for Breville, which the broker thinks have been "well managed".
The gross profit margin compression (151 basis points (1.51%) in the global product segment) in HY26 is a "function of some China sourced products" sold in the first half of FY26 and no price rises in the core US range, but this was "well managed" in a few different ways.
First, the ASX 200 share has executed a production shift of 80% of 120v product from China to lower tariff markets such as Cambodia, Indonesia and Mexico at a pace that has been "well handled".
Second, the distribution/retailer mix has been "optimised".
Third, price rises for tail products has had a neutral gross profit outcome in dollar terms, assisted by competitor pricing and range decisions.
Looking ahead to FY27, the gross profit margin upside exists due to the shift to a full 12 months to lower US tariff countries, although uncertainty is "likely to continue". In the longer-term, AI adoption by the company is expected to assist cost management and operating leverage tailwinds.
How much could the Breville share price rise?
After seeing the report, UBS said:
Retain Buy rating due to attractive double digit EBIT growth & ROIC expansion from FY27E (growing TAM [total addressable market] & share gains drive revenue, production efficiencies & execution drive margins & capital efficiency).
UBS has a price target of $39 on the ASX 200 share, suggesting the business could rise by around 20% over the next year.
