THG PLC on Tuesday announced plans to demerge its technology platform, THG Ingenuity, and switch the listing of its core beauty and nutrition business to improve liquidity and raise visibility.
However, shares fell 9.0% to 58.46 pence each in London on Tuesday as the firm forecast adjusted earnings before interest, tax, depreciation and amortisation would be towards the lower end of the analyst consensus.
THG said revenue in the first half of 2024 declined 3.6% to £934.0 million from £969.3 million a year prior. Its pretax loss, however, slimmed to £118.1 million from £133.0 million.
It hailed a ‘standout performance’ at THG Beauty, though the going was tougher at THG Nutrition, as a weaker yen hurt trading for its MyProtein brand.
The forex headwinds trimmed first-half profit at the Nutrition unit by £5 million. But THG said momentum in Nutrition is ‘pleasing’, with an expected return to revenue growth in September, ‘providing a strong platform for both peak trading and the year ahead’.
Revenue at THG Beauty rose 5.7% to £531.0 million from £502.5 million, but fell 11% at THG Nutrition to £299.9 million from £336.7 million. At THG Ingenuity, revenue rose 13% to £80.2 million from £71.2 million.
Looking ahead, THG expects adjusted Ebitda to be towards the lower end of the analyst consensus range which it put at £133.8 million to £156.5 million.
Beauty and Ingenuity are expected to deliver year-on-year adjusted Ebitda margin progression for the full year, with Ingenuity adjusted Ebitda anticipated to be ahead of market expectations.
Analysts at Panmure Liberum said the results ‘are disappointing with Nutrition profitability much softer than expected and Beauty growth slowing despite a favourable market backdrop.’
Announcing plans to spin-off the Ingenuity business, THG said it was ‘undertaking detailed work to review potential structures to facilitate the demerger’.
It said tax clearances had been received from HRMC but could not put a timescale on when the demerger would happen.
‘Post a demerger, the group would consist of THG Beauty and THG Nutrition, two globally leading consumer businesses, which are highly profitable, cash generative and capable of paying dividends,’ the firm said.
In addition, THG said it has taken a step towards changing its London listing category, sizing up FTSE UK Index Series inclusion.
The firm said it has appointed a sponsor to facilitate the transfer of its shares to the equity shares (commercial companies) category of London’s Official List.
The transfer will allow the firm to be considered for inclusion in the FTSE UK Index Series.
This would ‘improve passive investment flows and liquidity’, and raise ‘visibility’, THG added. ‘The group is targeting to effect the ESCC transfer for index inclusion no later than March 2025,’ it explained.
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