21st Apr 2022 10:56
(Alliance News) - THG PLC on Thursday reported annual earnings growth, a decent start to 2022 and added that it has received "numerous" takeover proposals in recent weeks.
The online beauty products platform said it rejected all the proposals as they do not reflect its fair value. It also confirmed it is not currently in receipt of any approaches.
The update came alongside THG's annual results, which showed revenue in 2021 jumped 35% to GBP2.18 billion from GBP1.61 billion the year before. Its pretax loss slimmed to GBP186.3 million from GBP534.6 million.
Chief Executive Matthew Moulding said: "In our first full year as a public company, 2021 saw us scale revenue and expand our business model, well ahead of targets set at IPO. We delivered a record revenue performance for the year, with group revenue up 38% year-on-year to GBP2.2 billion. On a two-year basis, THG has grown revenues 95%; effectively doubling the size of the business."
On more recent trading, THG said the first quarter of 2022 saw "very encouraging" consumer demand against a challenging comparable lockdown period in 2021, and added that the second quarter has started in line with expectations.
First quarter revenue was up 16% annually at GBP520.2 million. It is 84% higher than two years earlier.
For the whole of 2022, THG expects revenue to rise by between 22% and 25% at constant currency, before a 1% hit from Russia and Ukraine.
It does expect such marked growth in adjusted earnings before interest, tax, depreciation and amortisation, however.
THG's adjusted Ebitda is expected to remain at levels similar to 2021's GBP161.3 million, which was a 7.0% hike from GBP150.8 million in 2020.
THG added: "The near-term environment has evolved significantly since January due to a number of global factors including; the war in Ukraine, Covid-19 related lockdowns in Asia, and inflationary pressure across almost all cost lines. [Foreign exchange], whey commodity prices and inflation remain the key adjusted Ebitda margin drivers for FY 2022, and ongoing automation in the network, vertical integration and cost saving actions will help to offset some of these pressures.
"Given the continually evolving external considerations, the board anticipates FY 2022 adjusted Ebitda to be broadly in line with FY 2021, with a weighting to H2 2022. The full year effect of anticipated improvements primarily expected in the second half across whey commodity prices, business model efficiencies driving improved operating leverage and increased Ingenuity Commerce revenues, all support continued margin recovery in 2023 and a return to 9.0% to 10.0% adjusted Ebitda in the medium-term."
In 2021, THG's adjusted Ebitda margin declined to 7.4% from 9.3%.
THG said recent accelerations of inflationary pressure are of a "transitory nature".
On recent takeover proposals, CEO Moulding said: "You will all be aware that there has been significant speculation about possible third-party interest in THG. I can confirm that the board has received indicative proposals from numerous parties in recent weeks. The board has concluded that each and every proposal to date has been unacceptable, failing to reflect the fair value of the group, and confirms that THG is not currently in receipt of any approaches. We continue to focus on delivering our exciting growth strategy across a number of large global sectors, and prepare to step up to the premium segment of the LSE at the appropriate time."
THG made its London Stock Exchange debut back in September 2020. Life as a listed company has not been plain-sailing for the company since then.
Shares floated at 500 pence each. On Thursday morning in London, the stock was up 16% at 109.95p each, meaning shares are down almost 80% from the IPO price.
A capital markets day in October of last year, designed to shore up investor confidence, spooked traders instead. Since then, THG shares have faced selling pressure.
Also in October, founder and CEO Moulding announced he will give up his so-called 'golden share', clearing away a corporate governance issue that has troubled investors and opening up the possibility of joining FTSE indices. The move was made "in furtherance of good corporate governance".
The share allowed Moulding to veto any takeover bid for three years. It has been unpopular with investors and blocks THG from joining the FTSE 100 or FTSE 250 indices.
In March, Moulding stepped aside as executive chair, though he kept his CEO post. THG appointed Charles Allen as independent non-executive chair.
By Eric Cunha; [email protected]
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