The Breville Group Ltd (ASX: BRG) share price was an outstanding performer in 2020.
The appliance manufacturer’s shares surged an impressive 46% higher over the 12 months.
Why did the Breville share price surge higher?
Investors were scrambling to buy the company’s shares for a number of reasons in 2020.
One was its strong performance during the pandemic. A shift to cooking and working at home led to an increase in demand for whitegoods such as cooking equipment and coffee machines.
This underpinned strong revenue and profit growth in FY 2020. For the 12 months ended 30 June, Breville reported a 25.3% increase in revenue to $952.2 million and an 18.2% lift in gross profit to $320.6 million.
Also giving its shares a lift were comments by management in relation to its global expansion. With the company’s Sage brand across Europe yielding strong net sales results, it is now expanding into the Middle East.
Acquisition of Baratza.
Breville’s shares were given another boost in October when the company announced the acquisition of Seattle-based coffee grinding company, Baratza.
The company acquired Baratza on a cash and debt free basis for a total consideration of US$60 million. Approximately US$43 million of this consideration was paid in cash, with US$17 million being paid through the issue of 884,956 shares.
Management believes the acquisition will be complementary to Breville’s existing premium coffee business. It notes that it brings together two of the world’s leading companies in the design and global distribution of coffee products.
FY 2021 guidance.
Also going down well with investors last year was its guidance for FY 2021.
At its annual general meeting in November, Breville revealed that it expects its earnings before interest and tax (EBIT) to be consistent with the market’s current consensus forecast range of $128 million to $132 million.
This will be up 13.3% to 16.8% on FY 2020’s EBIT of $113 million.
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Returns as of 6th October 2020
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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