Supplier of health, beauty, and care products McPherson’s [ASX:MCP] has released a peek at its first half 2023 results ahead of the full release scheduled for 15 March.
Sales revenue increased by 3% increase on the same time last year. However, underlying profit before tax bumped down 24% as certain brands failed to perform, and rising costs hurt the budget.
MCP shares were suspended on Tuesday ahead of the full results release, frozen at 62 cents a share.
In the last 12 months, the company’s stock has downgraded by 27%, having moved down 8% over the past month:
Core brands fail to lift in McPherson’s 1HFY23
MCP gave the market a sneak peek at how business has fared over the past six months.
Underlying results remain in line with preliminary results released a month ago, with underlying EBITDA down 11% to the total of $8.9 million, whereby in the first half of 2022, it was $10 million.
Sales revenue may have gone up by 3% to $112 million ($108.8 million in 1H 2022). Underlying profit before tax (its PBT) had plunged 24% year-on-year, from $6.7 million in 1H 2022, to $5.1 million in the last half.
Statutory PBT came to $1 million, admittedly better than last year’s loss of $3 million.
McPherson’s quoted net bank debt of $13.9 million. However, this includes 10% gearing, and the group still decided to reward its shareholders with an interim dividend of 2 cents a share, fully franked and to be paid by 6 April.
Grant Peck, CEO of McPherson’s, stated:
‘The company’s 1H23 performance reflects divergent results in our core brand portfolio and key channels of pharmacy and grocery. We recorded double-digit growth in sales of our essential beauty brands, Swisspers, Lady Jayne and Manicare and 30% growth in sales of the Fusion Health brand. However, a 6% decline in sales of Multix during the half as well as a 32% decline in sales of A’kin largely offset these gains.
‘Reduced sales and margins in the grocery channel, where the company’s Multix brand is sold, was the key driver of the decline in 1H23 underlying profit before tax and adversely impacted the carrying value of the brand.’
MCP caught up in uncertainty
Peck explained that a weak consumer environment, coupled with raised sea freight costs and raw materials expenses, have been pressures that have compounded the group’s inability to reach profitability in the half.
He hopes that regardless of the ongoing pressures, the group’s new product innovations and consumer relationships (which led to 16% growth in domestic pharmacy channels) will continue to drive results.
Peck expressed some relief at lowering freight and raw materials costs. However, he cautioned that the broader economic environment remains uncertain.
The group takes comfort in its current funds to see it through the volatile market, hoping its ‘robust balance sheet’ can guarantee a stable position in the current economic cycle.
Still, McPherson’s is pushing for expanded distribution of the Fusion brands as well as growth in its essential beauty brands, with the ANZ part of the business alone investing $1.7 million for advertising and promotions.
Australia’s reset and restructure…where does this leave you?
Have you been thinking much about the state of the world lately?
Changes are all around us. They grow by the day. And the signs that the Australian economy is not what it once was are everywhere.
Jim Rickards, one of the world’s top financial and geopolitical analysts, has joined the dots nobody else has — certainly not the mainstream media.
He says, ‘no one is talking about how this could end the Australian economy’ as we know it, and it could be as soon as within the next 12 months!
But if you can learn the patterns and get yourself ready for change — this could put you ahead of the curve.
If you want to know more about the biggest geoeconomic shift of our lifetime, click here.
For Money Morning