About BWX Limited
BWX is a global, wholesale distributor and owner of skincare and other wellness products for the beauty sector. The company is best-known for its range of Sukin skincare products, but also owns other brands including Andalou Naturals, Mineral Fusion and Nourished Life. BWX’s products are sold throughout Australia and the USA, and the range is available online throughout Asia.
What Did BWX Report?
The natural beauty company reported weak revenue growth of 0.5% over FY18, although 2H19 results were 19% higher than 1H19.
Underlying EBITDA declined by 47.2% to $21.3 million, while statutory net profit after tax (NPAT) was down 70% and underlying NPAT was down 54.5%.
BWX announced a dividend of 2.7 cents per share, which is within the dividend payout guidance range of 35-50%. This results in a full-year dividend of 2.7 cps in FY19, compared to 7.45 cps in FY18.
The analyst estimate from Bloomberg was $10.27 million for NPAT and a dividend of 1.2 cps. BWX’s declared dividend is more than double the estimated dividend, but statutory NPAT came in below estimates at $9.5 million. However, underlying NPAT was $11 million for FY19.
Nonetheless, these results are in-line with BWX’s heavily downgraded profit guidance.
Management Comments
BWX CEO and Managing Director Dave Fenlon said brand health remains strong despite the financial performance.
“While 2019 presented challenges that are reflected in our financial outcomes for the year, our overall brand health remains strong,” he said.
“The Group will continue its investment in brand building, process improvement, capability and innovation to drive deeper consumer penetration and basket size supporting double digit revenue and EBITDA growth in FY2020.”
Mr Fenlon also spoke of the two biggest consumer markets in the world, China and the US, as a major focus for the company. In addition to this, the company has plans to launch Sukin in Germany.
FY20 Outlook
As mentioned by Mr Fenlon, BWX expects double-digit growth in FY20. More specifically, BWX is expecting revenue growth of 20-25% and EBITDA growth of 25-35% over the coming year.
This outlook could be what is pushing the BWX share price up, with 2020 forecasts seemingly above investor expectations.
Is BWX A Buy?
BWX seems positive about its future and the growth in 2H19 is encouraging. However, the financial results for FY19 tell a different story. What I was hoping for was a more thorough explanation of why revenue was flat and why EBITDA and NPAT have taken such big hits. Instead, the report focusses on all of the positives and almost fails to acknowledge the actual results.
BWX could indeed turn itself around but for these reasons, I’d rather invest elsewhere.
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Disclosure: At the time of writing, Max does not own shares in any of the companies mentioned.
