Branded home, hygiene and e-commerce product developer and supplier Pental Ltd (ASX:PTL) reports that its key consumer brands stood up well to the tough market conditions of the past year.
While the company’s full-year underlying EBIT of $7.438 million was slightly below expectations and down 31% on the prior year, its traditional business continues to perform strongly despite reductions in household spending.
Pental said the decline in profit was attributable to the newly acquired Hampers with Bite segment, where revenue was down 23.1% compared to FY22.
Pental’s traditional business, excluding Hampers with Bite, performed strongly in FY23 with revenue increasing 6.0% and underlying EBIT increasing 18.3% from a year earlier.
Across the business as a whole, Pental achieved net profit after tax (NPAT) of $4.890 million, a 23.2% decline from FY22.
The board has declared a fully franked final dividend of 1.0 cents per share payable to shareholders on the record date of September 18, 2023. This takes the total full-year dividend to 2.3 cents per share and represents a payout ratio of 79.9% of underlying NPAT.
The company notes its low debt, with gearing levels of 7.2% at June 30 and says it is in a strong position to drive continued profitable growth with healthy cash flow and balance sheet.
Hampers with Bite
Pental’s Hampers with Bite segment faced tough market conditions over the past financial year following a very successful FY22 that was boosted by lockdowns that drove the e-commerce sector.
Rising inflation, interest rates, decreased discretionary spending and the general economic environment challenged this segment and saw revenue negatively impacted.
Hampers with Bite achieved revenue of $24.344 million in FY23, down 23.1% compared to FY22. But despite a challenging FY23, the group remains positive, having undertaken several strategic measures to ensure the business is better equipped to mitigate economic downturn risks and overall seasonality from the business.
Measures include ongoing implementation of a new enterprise resource planning system, website upgrade, increased product offering, data analytics and onboarding of new customers.
Pental has also implemented marketing initiatives to improve key operating metrics, including retention of B2B clients and optimising the growth potential of its large B2C customer base.
Meanwhile, the flagship brand ‘White King’ continues to be a market leader and demonstrates strength of brand, maintaining two rankings (number 1 and 3) in the top 3 selling SKUs in the manual toilet segment across the grocery market.
Looking ahead
Pental says it remains competitively positioned to drive continued profitable growth with a healthy balance sheet, whilst accelerating opportunities in the eCommerce space to gain greater market share.
The company confirms that despite a challenging broader economic environment throughout the last financial year, its strategic priorities remain unchanged:
"As previously flagged, our Hampers business experienced tough market conditions which provided significant headwinds. However, we remain optimistic on the outlook for Hampers and spent FY23 investing significant time and resources to strengthen the business moving forward.
"We continue to enjoy a strong balance sheet which has enabled us to continue to deliver value back to our loyal shareholders in the form of fully franked dividends whilst also targeting other growth opportunities in the marketplace."