THG (THG) H1 2024 earnings summary

Executive summary

• Group continuing revenue grew 2.2% YoY at constant currency to £911.1m, with Beauty and Ingenuity offsetting Nutrition headwinds.

• Adjusted EBITDA margin held steady at 5.7%, supported by cost management and lower distribution costs.

• Record H1 adjusted EBITDA in Beauty (£32.6m, +169%) and Ingenuity (£11.0m, +227%) driven by margin improvement and strategic focus.

• Nutrition faced FX volatility and rebrand disruption, but offline and online channels showed strong growth and momentum is improving.

• Strategic review led to exit of non-core categories, including sale of luxury portfolio, strengthening the balance sheet.

Financial highlights

• Continuing revenue: £911.1m (+2.2% YoY); total group revenue: £934.0m (-3.6% YoY, reflecting discontinued categories).

• Adjusted EBITDA (continuing): £52.3m (vs. £51.5m H1 2023); margin stable at 5.7%.

• Gross margin: 42.4% (down 20bps YoY); distribution costs reduced to 11.5% of revenue (from 13.7%).

• Free cash outflow for H1 was £128.5m, with underlying cash generation improving on an LTM basis.

• Capex reduced to 5.8% of revenue (from 7.4%), with a 25% YoY reduction.

Outlook and guidance

• H2 expected to be the most profitable and cash generative period, with Beauty and Ingenuity mitigating Nutrition's YoY decline.

• FY 2024 EBITDA expected at the lower end of consensus; Beauty and Ingenuity to show YoY margin progression.

• Nutrition adjusted EBITDA margin expected to recover to ~12% in FY25 as ASPs normalize and local manufacturing in Japan scales.

• Year-end net debt expected broadly unchanged, with improved operating cash flow and lower H2 capex.