Manufacturer and distributor of well-known home and hygiene products, ASX-listed Pental Limited could be in for a cracking lift in earnings after releasing its guidance to the market for the first half of the 2022 financial year. It expects underlying EBIT for the half year to clock in at about $6.5 million, a spectacular 53 per cent uplift on the previous corresponding period.
Pentaly says it expects full year underlying EBIT for to come in at about $9.8m, representing a 20 per cent increase on the $8.1m booked in FY21.
The boost in projected earnings follows the company’s acquisition of e-commerce business, Hampers With Bite in September this year.
The strategic acquisition aims to diversify Pental’s existing sales channels and ramp-up its e-commerce-led growth strategy designed to reduce reliance on lower margin supermarket sales.
Pental either distributes or manufactures a host of big name brands including Huggie, White King, Jiffy, Softly and Velvet is seeking to expand its e-commerce sales channels and generate growth in volume courtesy of the Hampers With Bite acquisition.
The company is also anticipating a stunning 65 per cent rise in revenue for Hampers in the first half of FY22 when compared with the corresponding half back in FY21.
Hampers is projected to contribute about $25.7m of a total of $67m in net sales revenues forecast for Pental in the half year.
Management says the surge in revenue for Hampers comes on the back of strong seasonal demand typical for the December quarter. Notably, it expects Hampers’ revenue for the final four months of the 2021 calendar year to exceed the entire sales performance generated by Hampers in FY21.
Pental’s expected underlying net profit after tax for the half year ending December this year of $4.5m, excluding the costs associated with acquiring Hampers, is also envisaged to record a stellar 55 per cent growth from the previous corresponding half year.
Hampers With Bite is an online hamper and gifting specialist running both a business-to-business and business-to-consumer model. It supplies gift hampers and food and wine hampers to its client base through a mix of own brand and third-party products.
Management believes Hampers’ established online sales channels could provide “transformative” growth for Pental’s other product lines.
Hampers boasts established direct-to-consumer distribution infrastructure that includes a strategically located delivery centre close to Melbourne’s CBD. Pental aims to benefit from Hampers’ supply route too by providing same day delivery options to its consumers, whilst also improving its delivery efficiency.
Importantly, Pental says the synergies and potential cross-selling opportunities of its own household brands through Hampers will kick into gear next calendar year.
Pental plans to execute a marketing plan designed to utilise Hampers’ e-commerce expertise and ramp up sales of its own consumer brands in early 2021.
It also intends to implement new non-seasonal growth strategies for Hampers early next year, with major occasions such as Valentine’s Day, Easter, Anzac Day and Mother’s Day to be targeted.
Pental says it looks like finishing the half year to December with a healthy $12m in bank which just might come in handy if the company gets a taste for the acquisition trail.
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