THG (THG) Trading Update summary

Nutrition division performance and outlook

• Whey protein market volatility is expected to normalize with 9% new supply in 2024, mainly from the US, and further capacity in Europe in 2025.

• Whey prices are assumed to remain high in H1 2024, with a 25% reduction expected in H2, potentially restoring profitability as prices ease.

• Myprotein remains the UK's top sports nutrition brand, expanding licensing and retail partnerships with 14 new licensed products in H2 2024.

• D2C model in India accelerated growth and new customer acquisition.

• 2025 guidance for nutrition expects mid-single digit growth, supported by normalized pricing, FX improvements, and higher average selling prices.

Beauty division performance and strategy

• Beauty retail saw 3.3% growth in Q4 2023 (ex-manufacturing), up from 2.5% in Q3, with strong performance from Lookfantastic and Cult Beauty.

• The division underwent a major overhaul, focusing on profitable customers and pulling back from less profitable, distant markets, impacting some volume metrics.

• Beauty margins have reached medium-term targets ahead of schedule, with ongoing focus on maintaining profitability while driving top-line growth.

• Lookfantastic partnered with The White Company and doubled cyber period visits vs. nearest peer.

• Expansion into physical retail with Lookfantastic stores is underway, aiming to enhance brand supply and customer experience.

Financial position and capital allocation

• Group holds £400 million in cash and £150 million in unused revolving credit facility, with reduced CapEx and lease costs following the Ingenuity demerger.

• Gross leverage materially reduced, with approximately £550m in year-end cash and available facilities.

• Focus is on reducing gross leverage and interest costs, leveraging improved cash generation as nutrition margins recover.

• Capital expenditure to reduce to ~£20m p.a., and cash lease costs to ~£22m p.a.

• Future cash generation to support further deleveraging toward a neutral net cash/net debt position.