Science in Sport has this morning issued a trading update within which the nutrition giant has edged into profitability on the back of a sustained period of investment.
Momentum carried from online trading, now on course to be worth 51% of sales, has edged the firm toward what it says will be profitable trading on an EBIDTA level in 2020. Last year the firm narrowed its losses to £0.3 million, continuing a steady trend of improvement.
Further to the online momentum and overseas trade improvements, the firm’s gross margin is forecast to have gained 4 percentage points this year, rising from 44% to 48%. Fr the second half of the year that figure has further improved to reach 50%. “We see this as a sustainable base,” read this morning’s RNS.
As has been the trend in the wider marketplace, online trading has offset the negative effects of the pandemic. Online revenues increased by 39% year-on-year, reaching £23 million by the end of November. At over half of the group’s projected revenue for the year, the trajectory for online has been sharp; last year 38% of trade went through the firm’s digital platform.
The PhD arm of the business likewise has begun to bear fruit on the back of similar investment in online. This trade rose 108% in the year to November, like-for-like.
Having advanced on the USA,cash burn attributed to the initial investment is “significantly reduced” while trade has risen by 32%. Gross margin improved to the tune of 74% on the back of a streamlining of operations stateside.
Overall revenues are expected to have held firm year-on-year in the face of the pandemic, despite the “severe” downturn in April and May. Science in Sport expects Group revenues for 2020 will be in the region of £49.8 million, versus £50.6 million in 2019.
Underlying EBITDA is expected to be £1.0 million for the year, with exceptional costs of £0.3 million attributed to Covid attached. The business is said to have had a positive EBITDA since June 2020.
The firm’s cash position remains strong with around £10 million expected to be in the bank by the end of the year. £0.5 million generated this year is included. This is after accounting for capital investment in production capacity and technology platforms, says SiS.
Stephen Moon, Science in Sport’s Chief Executive Officer, commented: “I am pleased to announce the business is performing well. We bounced back strongly following our decisive actions in March and April to restructure the business and strengthen the balance sheet. Our focus has been accelerating our long-term growth strategy and investing in our online business, and this has successfully delivered for us.
“We have invested in technology and talent to drive our online business across global territories for 2021 onwards, and we have continued to drive innovation and brand equity to underpin our premium margin business.
“A new supply chain unit is planned for late 2021. This will build further on the substantial progress made in gross margin during this year, and we expect to make progress throughout the strategic planning period.
“Whilst it is too early to reinstate guidance for the longer term, once the COVID-19 pandemic abates, we are well positioned to take advantage of profitable growth opportunities in all major global regions.”
Science in Sport recently pleased many consumers by announcing a steady move towards recyclable packaging.