Vaping group reports record sales and profit growth and raises full year forecasts

Sandy Chadha

Supreme, the Stretford-based manufacturer, supplier, and brand owner of fast-moving consumer products, including vaping goods, reported record revenue and profit growth for the six months to September 30, 2023, today.

It also raised revenue and adjusted EBITDA forecasts for the full year.

Turnover jumped by 63% to £105.1m, while pre-tax profits of £12.3m represented a 179% improvement on the previous year.

Net debt rose by 36% to £19.8m, but shareholders will receive an 88% increase in an interim dividend payment of 1.5p per share.

Revenue growth was driven by The ElfBar distribution opportunity, which generated £26.4m revenue in the period, strong organic growth of £8.7m arising from Lighting (21% growth), Vaping (17% growth) and Sports Nutrition & Wellness (17% growth), and the contribution of prior-year acquisitions, which reported growth of £5.4m.

In July this year, Supreme revealed that it had won a deal worth up to £30m to distribute vaping brands ElfBar and Lost Mary.

During the reporting period the business completed the fit-out of its ‘Ark’ warehouse on time and on budget with minimal disruption to the wider business. Ark has become the group’s new principal warehousing and distribution centre which will support both organic and acquisitive growth.

Supreme also achieved a 25% increase in vaping production capacity of its Manchester-based manufacturing site to accommodate the manufacturing operations of all three vaping businesses acquired in fiscal year 2023 and to support further organic growth.

It rolled out and significantly scaled the new ElfBar distribution opportunity, including new customer onboarding and extensive product testing, which, it said, demonstrates the company’s ability to adapt quickly to new opportunities.

And it announced a number of proactive measures to combat underage vaping, which Supreme strongly believes should be adopted by all industry players:

Looking ahead, Supreme said the second half of the 2024 financial year has begun very well, with continued growth reported across all divisions within the group.

This strong performance in the core business and the growing breadth of ElfBar distribution, combined with a tightly controlled overhead base, have led the board to, again, significantly increase its expectation of full year profitability for the year ending March 31, 2024.

The group now expects trading for FY 2024 to be significantly ahead of company-issued guidance, with revenue guidance of around £210-225m and adjusted EBITDA guidance of approximately £32-35m, an increase of around £4.5m compared with the previous company-issued guidance5, with around £1.5m of the incremental adjusted EBITDA arising from the core business and around £3m incremental adjusted EBITDA arising from the ElfBar distribution opportunity.

The consultation on possible new UK e-cigarette regulations ends on December 6, 2023, and the group said it remains confident that the Government will continue to recognise the important role that the vaping industry plays in delivering the country’s ‘Achieving Smoke-free 2030’ initiative.

Chief executive, Sandy Chadha, said: “This strong performance has been undoubtedly driven by our established vaping activities, alongside solid sales momentum across the remainder of the business including sales growth in Lighting of 21% and Sports Nutrition & Wellness of 17%.

“In light of our growing presence across the UK vaping sector, we remain highly vigilant to the growing problem of underage vaping and welcome any preventative measures that prevent the supply of vape products to underage individuals whilst acknowledging the important role that the vape industry will continue to play in delivering the UK Government’s ‘Achieving Smoke-free 2030’ initiative.

“Looking ahead, the second half of the year is shaping up to be another significant period for Supreme. The group remains ideally placed to continue to deliver robust operational and financial progress as we strive to deliver ongoing profit momentum.”

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