Science in Sport hails cost savings and US partnership

Science in Sport has this morning hailed a range of operational cost savings attributed to its manufacturing investments, among other cost reductions as setting the business up for a more profitable future.

In its pre-close trading update for the financial year ended December 31st, 2022 the business has already measured stronger margin performance in the second half down to the completion of the new Blackburn site where a new state-of-the-art protein bar line has been just recently commissioned.

On that one production unit Science in Sport writes “This asset eliminates proposed substantial 2023 co-manufacturing cost increases and will contribute significantly to profitability. In addition to a transformation in margin, the new line underpins major innovation projects which are expected to deliver incremental revenue in 2023.”

Further cost reductions came from people costs, which registered under budget and this cost is expected to be broadly similar despite mention of wage inflation. Other overheads are expected to be reduced in 2023, though the statement does not further expand upon these, other than to allude to “the delivery of sustainable cost savings across the business.”

As for sales, Science in Sport recently inked a deal to increase its US distribution via an agreement with The Feed, a leading online distributor of endurance nutrition brands in the region. This is expected to deliver strong cash generation for the firm.

Added to that, the firm has a new partnership with Flywheel Digital, a global leader in Amazon growth delivery. On this front it is 2023 sales to the consumer that are showing good growth, and SiS expects “to see outperformance from March because of the new partnership.”

So, what about bike retail? At this level, in all regions, growth was in line with expectations with the UK apparently registering a particularly strong start to 2023. Margins were said to be improved on many lines thanks to the aforementioned supply chain efficiencies.

Forward looking, SiS said that an inventory reduction with Amazon, plus Covid-19’s affects on the Chinese marketplace were alleviating. With improved margins and some price increases coming into effect, the firm is confident for the year ahead. The tone is notably improved on the last update where the business had raised extra cash and was said to be considering a sale of the business.