THG (THG) H1 2024 earnings summary

Executive summary

• Group continuing revenue grew 2.2% YoY at constant currency to £911.1m, with Beauty and Ingenuity offsetting Nutrition headwinds.

• Adjusted EBITDA for continuing operations rose 1.6% YoY to £52.3m, with margin stable at 5.7%, supported by cost management and lower distribution costs.

• Beauty and Ingenuity delivered record H1 results and margin expansion, while Nutrition faced FX and rebrand disruption but saw robust offline growth and is expected to return to growth.

• Strategic review led to exit of non-core categories, including sale of luxury portfolio, strengthening the balance sheet.

• Major Myprotein rebrand completed, enabling entry into larger offline markets and new licensing deals.

Financial highlights

• Continuing revenue: £911.1m (+2.2% YoY); total group revenue: £934.0m (-3.6% YoY, reflecting discontinued categories).

• Adjusted EBITDA (continuing): £52.3m (margin 5.7%, flat YoY); record H1 adjusted EBITDA in Beauty (£32.6m, +169%) and Ingenuity (£11.0m, +227%).

• Gross margin: 42.4% (down 20bps YoY); distribution costs reduced to 11.5% of revenue (from 13.7%).

• Free cash outflow for H1 was £128.5m, with underlying cash generation improving on an LTM basis.

• Net debt before lease liabilities increased to £350.5m, with cash and available facilities at £457.7m.

Outlook and guidance

• H2 expected to be the most profitable and cash generative period, with Beauty and Ingenuity mitigating Nutrition's YoY decline.

• Group expects to be at the lower end of analyst consensus EBITDA range, with year-end net debt broadly unchanged YoY.

• Nutrition adjusted EBITDA margin expected to recover to ~12% in FY25 as ASPs normalize and local manufacturing in Japan scales.

• CapEx expected to materially decrease in H2 and next year.

• Beauty and Ingenuity anticipated to deliver YoY adjusted EBITDA margin progression for FY24; Ingenuity to exceed market expectations.