Trilogy meets guidance with 19% gain in full-year earnings, cites raw material costs

Friday 26th May 2017

Earnings before interest, tax, depreciation and amortisation rose to $19.4 million in the 12 months ended March 31, from $16.3 million a year earlier, the Auckland-based company said in a statement. Net profit rose 35 percent to $12.7 million including a one-time gain from changing to CS & Co as distributor. Sales climbed 25 percent to $103.7 million, with CS & Co accounting for the biggest portion of the increase.

The full-year results show earnings weren't as strong at the company's Natural Products (mainly the Trilogy brand) or home fragrance (Ecoya scented candles). While sales at Natural Products rose 13 percent to $38.8 million, ebitda grew just 2 percent to $11.8 million, which the company attributed to its investment in the Goodness brand, higher raw material costs and foreign exchange movements.

Home fragrance sales rose 7 percent to $21.4 million but ebitda dropped to $1.8 million from $2.5 million, which it said reflected a narrower gross margin, corporate costs and brand investment. Its strategy for 2018 includes a relaunch of the brand "to ensure brand and product continues to attract target market", new products and online sales.

The 2017 results show the diminishing contribution from Ecoya, the business the company first brought to market in May 2010 when it listed as a body, bath and home fragrance company. By September of that year it had agreed to buy the Trilogy skincare products business.

Trilogy's distribution business (CS & Co) lifted revenue by 87 percent to $53.4 million from the $28.6 million it contributed in the previous part year. Revenue growth amounted to 27 percent based on pro forma numbers for 2016. Ebitda rose to $8.5 million from $4.8 million, which it said was a 27 percent gain on pro forma 2016 sales.

The company said it expects underlying revenue growth to be consistent with 2017 for each segment of its business. Group ebitda "will continue to grow, despite gross margin compression as a result of higher raw material prices within Trilogy skincare," it said.

Trilogy will pay a full-year dividend of 4.5 cents a share compared to a 2016 final dividend of 5.45 cents.

Trilogy shares rose 3 percent to $2.37 and have declined 24 percent this year.

(BusinessDesk)

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