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Supreme Plc (LON:SUP) is put under the spotlight by Matthew Chadwick, Equity Research Analyst at Berenberg, in an interview with DirectorsTalk, following their recent results announcement for the twelve months to 31 March 2023.
Q1. What are the highlights from Supreme’s FY 2023 results?
Vaping was undoubtedly the standout performer for the group, with sales up 75% yoy, driven by both organic growth and the acquisition of two businesses in the year. Management also did a good job of protecting group profitability, with adjusted EBITDA of £19.4m down only slightly from the prior year (£21.1m), despite temporary margin headwinds relating to recent acquisitions, Lighting category weakness and cost inflation in the Sports Nutrition and Wellness category.
Q2. How do you see the outlook for the company?
The company has seen strong momentum in the start of the year, with the performance of the existing business contributing to at least a £1m increase in adjusted EBITDA relative to previous expectations. We are also excited by the announcement of Supreme being appointed a master distributor for vaping brands Elfbar and Lost Mary, which it expects to generate a further £25m-30m of revenue and c£2m of incremental adjusted EBITDA in FY 2024, and we think should also provide cross-selling opportunities into a number of major retailers. With a strong balance sheet position, we also see the potential for further acquisitions in the medium term.
Q3. Have you forecasts changed in any way?
We raise our FY 2024/25 adjusted EBITDA forecasts by 13%/10% off the back of strong momentum and the vaping distribution agreement mentioned above, but think continued strong performance in vaping could drive further upgrades as the year progresses.
Supreme plc (LON:SUP) is Europe’s leading manufacturer, brand owner, licensee and distributor of batteries, lighting, vaping and light fittings. We are also a leading name in sports nutrition, wellness and household products.
