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Applied Nutrition has topped sales guidance given at the time of its IPO as strong growth in the UK offset falls in the Middle East.
The company’s revenue grew 4.8% to £47.6m in the six months to 31 January, with the UK seeing a rise of 34%.
This UK growth was led by new listings in Ocado and Central Co-op, as well as increased shelf space at Tesco and Asda. The country now makes up close to half the company’s total sales.
Applied Nutrition has recently signed a new strategic partnership with Holland & Barrett which, alongside new listings with three major US retailers, is expected to contribute more than half of the company’s revenue growth next year.
The company’s share price is down 18% since its IPO, primarily due to concerns that its revenue and profit margin is unsustainable.
It said it did not expect to be materially affected by US tariffs as it had “a number of options” to mitigate the impact. These include moving the production of liquid products from the UK to the US.
Its Middle East revenue was hit by customers bringing forward £5.5m of orders into the past financial year due to the Red Sea crisis in 2023. It also made the “very uncommon” decision to exit a distributor relationship as it “was not approaching the market in the manner we expect”.
This weighed on earnings with pre-tax profits falling 26.7% to £11.8m. The company also saw freight and input costs rise significantly with whey prices just starting to retreat from record highs.
Wayne Brown, an analyst at Panmure Liberum, noted that despite this, its earnings before interest, taxes, depreciation, and amortisation margin remained at 29%.
“The model is flexible, and there is momentum in gaining new distribution across the globe,” he said. “We would hope the shares start to reflect the positives as time reveals that some of the concerns are overdone.”
In Latin America, it has recently signed a deal with one of the region’s largest distributors of sports nutrition products, which the company said would enable it to expand its presence and enter new markets.
“This has been a period of significant milestones and progress – our IPO in October, launching our first TV advert to promote our products starring Coleen Rooney, developing relationships with exciting new customers, and expanding into new geographies,” said CEO Thomas Ryder.
This week
Hilton Foods publishes its full-year results tomorrow, alongside an update from the British Retail Consortium on its retail sales index.
Tesco is the standout event on Thursday when it publishes full year results. Britain’s biggest supermarket will be hoping its share price can recover some momentum after fears of an Asda-induced price war triggered a sell off last month.
Thursday will also see Barry Callebaut report quarterly results in Europe, while Friday brings an update on the UK’s latest GDP figures.
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