The BWX Ltd (ASX: BWX) share price will be one to watch this morning after the release of the personal care products company's half year results.
How did BWX perform in the first half?
BWX appears to have carried the strong momentum over from the second half of the last financial year into FY 2020.
For the six months ended December 31, BWX reported a 23% increase in revenue to $84.1 million and a 63% increase in underlying EBITDA to $11.6 million. The underlying result includes the impact of AASB 16 Leases. Excluding this, it would have been up 40% on the prior corresponding period to $9.9 million.
This means the company is on track to meet its FY 2020 guidance of revenue growth of 20% to 25% and EBITDA growth of 25% to 35%.
On the bottom line, BWX reported an underlying half year net profit after tax of $4.2 million, up 63% on the first half of FY 2019.
In light of this positive performance, the BWX board has brought back its interim dividend. It has declared an interim dividend of 1.3 cents per share fully franked.
What were the drivers of its growth?
The key Sukin brand was the strongest performer during the half. It reported a 43% increase in sales to $33.1 millon. It now represents 39% of total revenue. Management advised that this reflects the increasing availability of the brand to consumers in APAC and the US. Importantly, the growth was achieved with improved stock level controls.
Supporting its growth was the Andalou Naturals and Mineral Fusion businesses. Andalou Naturals reported a 15% increase in sales to $26.2 million and Mineral Fusion grew its sales by 28% to $12.7 million.
Management advised that Anadolu Naturals' growth was driven by continued strong sales performance in the US and increasing penetration in the Australian market. Whereas Mineral Fusion's growth was driven by the ongoing benefits of the packaging relaunch and the continued strong performance within the US Natural category.
Positively, since the end of the half, Mineral Fusion has launched across 770 US Target stores and online. This has significantly extended its reach to customers in the US.
Finally, the Nourished Life business was the laggard in the group, growing sales by 5% to $11.3 million.
Management commentary.
BWX Group CEO and Managing Director, Dave Fenlon, said: "BWX is experiencing strong momentum in its evolution into a global, category leading 'House of Natural Brands'. Our brands have an increasingly deep connection to consumers which is reflected in the Group's strong growth in the first half."
"The first half of FY20 saw the Group deliver on what we said we'd do. We have ceased unprofitable promotions; we have clearly defined our engine markets for growth and exited 16 countries; we are investing in direct-to-consumer marketing to educate and grow our addressable market; and we are focused on consumer-led innovation in new product development, all underpinned by a multi-channel retail approach and user-friendly digital platforms that accelerate direct-to-consumer access," he added.
Outlook.
Management believes it is well-positioned to deliver on its guidance of 20% to 25% revenue growth and 25% to 35% EBITDA growth for FY 2020.
However, it did warn that it is actively monitoring the coronavirus situation. Though, it notes that less than 5% of its revenue was China-influenced during the first half. Furthermore, it is confident that its prioritised international strategy can offset any potential China-related shortfall in the second half.
