THG: Cash flow improves at digital commerce giant
THG, the Manchester-based digital commerce giant, has posted EBITDA above the top end of guidance in the first half of the year.
The firm, which owns City PM, also saw a significant cash flow improvement of £350m compared to the past year, it confirmed in half-years released to the market this morning.
The firm has ditched the loss-making OnDemand business and whilst revenue across the business fell slightly year on year THG say this morning this is due to a “de-emphasis in certain beauty markets and the proactive pivoting of the THG Ingenuity strategy.”
Revenue in the first six months of the year sat at £969m.
THG’s Beauty and Nutrition divisions have seen stable order frequencies and order values despite inflationary pressures.
Ingenuity, the firm’s complete commerce division, has also signed deals with L’Oreal Group, L-Fashion Group, Matalan, Asda and Maximo in the first six months of the year.
The firm maintained profit guidance, with adjusted EBITDA margins increasing across the group from 4 per cent to 5.3 per cent in the first half.
Matthew Moulding, CEO of THG, said this morning: “Inflationary pressures provided significant challenges to consumers and businesses alike over the past 18 months. Our strategy of supporting our consumers through 2022, sacrificing margins in the short-term, is bearing fruit. This is reflected in the strong H1 results we’ve posted today, across adjusted EBITDA and cash.
“The cash performance of the Group has been strong in H1, but also over the last 12 months. Group cash flow performance improved by £350m compared to the previous 12 months, reflecting the completion of our global infrastructure roll-out program, with the Group now achieving significant operating leverage from a well invested, automated, global platform.
“Our Nutrition division delivered a record H1 revenue performance and, with inflationary pressures easing, posted substantially higher EBITDA margins year-on-year as we exited H1. The early results from the Myprotein rebrand are also encouraging as we’ve taken steps to further enhance the premium nature of the world’s No1 online sports nutrition brand. These actions should provide for both increased partnership opportunities and category expansion, supporting our ambition of building Myprotein into a global lifestyle brand.
“Recent progress within our Beauty division has been more encouraging, underpinned by strong performances in the Group’s Perricone MD and ESPA brands, as well as across Cult Beauty. Margin improvements have steadily built through H1, as focus shifted to orders that deliver immediate profitability, where we benefit from the economies of scale associated with our local distribution hubs.
“The Beauty division was held back in H1 by short-term global de-stocking impacting manufacturing volumes. The situation has now started to reverse with the Beauty division returning to growth since August, at the same time margin progression continues.
“Finally, Ingenuity’s pivot to larger, more complex Enterprise clients is gaining momentum, reflected in some key client wins and a strong pipeline. We were thrilled to be listed in the Gartner’s Magic Quadrant™ for Digital Commerce, in recognition of our ability to provide an all-encompassing Direct-to-Consumer journey, cementing Ingenuity as a key partner for Enterprise clients seeking comprehensive commerce excellence.”