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Sports nutrition specialist Science in Sport has launched a strategic review that could result in the sale of the company or assets as it warned of weaking consumer demand despite first half growth.

Reporting its results for the first six months of the year, the group posted 10% revenue growth after a strong first quarter.

However, subsequently it said trading was “impacted by global events and specific one-off events affecting sales and costs”.

It said it has taken a range of actions to lower costs and underpin sales growth, with trading improved in September.

However, that weakening demand meant underlying EBITDA was lower than planned, with an adjusted loss of £2.3m for the first half amid lower than expected growth given sharply reduced shopper confidence, input price increases, supply chain issues in the USA, and the closure of the Russia business.

It said the “decisive corrective actions” it has instigated are expected to restore monthly EBITDA profit during 2023.

Unbudgeted raw material and carriage costs and £0.3m in restructuring costs will add £2.9m to costs in 2022, while the closure of its business in Russia, supply chain issues in the USA, plus a July and August supply issue for PhD Smart Bars have cost us £4.3m in sales in the year to date.

Against this backdrop, the board said its current market capitalisation “fundamentally undervalues” the group and “does not recognise the inherent value of its premium brands and market positioning”.

Consequently, it has decided to conduct a strategic review of the business as a whole in order to maximise value for shareholders.

“An outcome of the review may or may not result in a sale of the company or of certain group assets,” it stated.

“The company confirms that it is not in talks with any potential offeror at this time and is not in receipt of any approach with regard to a possible offer.”

It has also pledged to raise £5m through a placement of shares at 15p per share.

This equity issue will be used to strengthen the Company’s balance sheet in the event there is any further downturn in the economy impacting sales or any unexpected increases in input material costs or other costs.

CEO Stephen Moon commented: “After a strong start to the year, weakening consumer demand, temporary supply chain issues and input cost increases have combined to impact our trading. Positively, our premium brands have enabled us to increase prices across all channels to help offset external factors and we have responded proactively, reducing costs with a focus on cash generation.

“Our investment in our new Blackburn site and in digital technology is complete and is delivering returns in line with the investment cases. Whilst sales are broadly in line for the year, there remain uncertainties and headwinds due to the macroeconomic environment. However, we are confident that our leaner operating model, the investment in our platform and the strength of our brands, together with our proven growth record, will result in a profitable growth business.”

The group’s shares have lost 29.9% of their value this morning to trade back to 16.5p.

Morning update

Carlsberg has appointed Ulrica Fearn as Chief Financial Officer and member of the executive board.

It said Fearn brings strong international financial experience from multiple senior positions in global companies and industries, most recently as CFO of Equinor, Norway. Prior to that she had 19 years of experience in the beverage industry at Diageo.

She replaces Heine Dalsgaard, who announced his resignation effective 31 December 2022 and will join on 1 January 2023.

CEO Cees ‘t Hart commented: “I’m very pleased to welcome Ulrica Fearn to Carlsberg. She comes with a strong track record and extensive financial experience from leading global companies, including within the beverage category. Ulrica will bring to Carlsberg a combination of stellar commercial credentials and a people-centric leadership style. She’s the right person to continue our disciplined performance management culture,” says CEO Cees ‘t Hart.

Fearn added: “Carlsberg is a truly iconic multinational company with a strong purpose. The company has a proud history and heritage, together with the values of giving back to society through the Carlsberg Foundation. These things, combined with a strong position and opportunities for the future, make it a truly exciting time to join Carlsberg.

“Carlsberg has delivered strong financial results and shown impressive resilience. I’m looking forward to working together with the team to continue and further strengthen and develop the company in line with the new ambitious SAIL’27 strategy,” says Ulrica Fearn.

The FTSE 100 has recovered 0.7% this morning from heavy falls yesterday to climb back to 6,930.8pts.

Risers include Naked Wines, up 5.1% to 86.3p, SSP Group, up 4.3% to 202.7p and Marks & Spencer, up 4.2% to 99.6p.

As well as Science in Sport, fallers include Hotel Chocolat, down 3% to 128p, Unilever, down 1.8% to 4,008.5p and Deliveroo, down 1.7% to 83.9p.

Yesterday in the City

The FTSE 100 slid 1.8% yesterday to hit its lowest level since April 2021 amid wider economic turmoil to close at 6,881.5p.

Major fallers included Pets at Home, down 10.5% to 257.8p, THG, down 10.4% to 36.5p, Ocado, down 10.2% to 469.3p, Just Eat Takeaway.com, down 8% to 1,368.4p, Marks & Spencer, down 7.9% to 95.5p, Greencore, down 6.2% to 70.5p, SSP Group, down 6.1% to 194.4p, Greggs, down 5.7% to 1,673p and WH Smith, down 5.5% to 1,190.5p.

Supermarkets Sainsbury’s and Tesco lost 5.5% to 172.3p and 5.3% to 200.3p respectively.

The day’s few risers included Bakkavor, which announced the retirement of CEO Agust Gudmundsson and gained 3.6% to 89.1p.

Other risers included Reckitt Benckiser, up 0.9% to 6,124p and Haleon, up 0.5% to 280.1p.

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