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Ecommerce giant THG is weighing up a demerger of its Ingenuity platform to help strengthen its balance sheet and reinvigorate the embattled stock.
The group, formerly known as The Hut Group, revealed this morning that it was actively undertaking detailed work for a spin off of the technology platform, which works with the likes of Coca-Cola, Nestle, Kraft Heinz and high street retailers on their DTC offers.
It added there was no certainty on the timescale of the move but it had received approval on structuring tax clearances by HMRC.
CEO and founder Matthew Moulding said: “After extensive discussions with shareholders over the past 12 months, THG is progressing options to demerge THG Ingenuity, leaving our highly profitable and cash generative global beauty and nutrition businesses within THG plc.
“The appropriate tax clearances have been received, while the necessary separation work has previously been undertaken.”
THG has endured a difficult ride since a £5bn IPO in 2020, with shares collapsing from a peak of 769p to lows of 36p in 2022 thanks to a string of profit warnings and governance issues centred around Moulding’s ‘golden share’.
The move to spin-off Ingenuity would simplify the group and comes alongside other plans announced this morning to recategorise its shares on the newly reformed premium segment of the London Stock Exchange.
It would enable the shares to be considered for inclusion in the FTSE UK Index Series, which THG said was expected to improve passive investment flows and liquidity.
THG also posted its first-half results this morning.
Revenues nudged up 0.1% to £911.1m in the six months to June, with the top line held back by a 11% fall in the nutrition division.
THG Beauty grew sales 5.7% to £531m and Ingenuity improved by 12.6% to £80.2m.
Nutrition was disrupted by a major rebrand at Myprotein as old branded stock was sold off on promotion and also by currency headwinds in Japan, which is the brands second largest market.
Adjusted EBITDA at the group rose in the half by 3.6% to £48.8m, while operating losses improved from £99.5m a year ago to £84.4m.
Net debt at THG increased from £268.3m to £350.5m year on year.
Morning update
Profits at McBride beat upgraded market expectations as demand for better value own label products boosted the cleaning products supplier in the year to 30 June 2024.
Revenues increased 5.2% to £934.8m, with adjusted operating profits soaring from £13.5m to £67.1m year on year.
It also moved back into the black at a pre-tax level, moving from a loss of £15.1m last year to profits of £46.5m.
CEO Chris Smith called it “an excellent financial and operational performance” by the group.
“While market dynamics have remained favourable, with a continued consumer trend towards private label across European household cleaning product markets, it is the effective execution of our strategy that has led McBride to capitalise on this environment,” he added.
The FTSE 100 is up 0.7% to 8,339.73pts this morning.
Markets reacted with scepticism to THG’s big announcement, with shares down 2.7% to 62.5p in the early going. The stock jumped 4% initially as markets opened before falling back immediately.
McBride increased 1.4% to 117.1p on the back of its results, putting the stock up by 168% in the past year after it recovered from the input cost inflation crisis.
This week in the City
Newsflow on the markets continues to pick up this week, with high street bellwether Next reporting first-half results on Thursday.
NIQ issues its latest monthly supermarket till roll data tomorrow, while PZ Cussons and Supermarket Income REIT file full-year results and, in the US, General Mills reports quarterly results.
Wednesday also brings the latest data on UK inflation from the ONS.
Ocado puts out a trading update for Q3 on Thursday, with the latest decision on interest rates due from the Bank of England.
The GfK consumer confidence index and UK retail sales figures from the ONS round out the week on Friday.
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