- Shares up 67% year-to-date
- Interim dividend up 20%
- Knock-on effect from Budget
Shares in Supreme (SUP:AIM) drifted in afternoon trade despite the fast-moving consumer products maker reporting an 8% rise in revenue to £113 million for six months ending 30 September.
Supreme supplies products across six categories: batteries, lighting, vaping, sports nutrition & wellness, branded distribution and soft drinks.
CLEARLY DRINKS SUCCESS
Supreme’s £15.6 million purchase of UK drinks maker Clearly Drinks - financed entirely from the company’s own cash reserves - helped bolster the company’s first half earnings contributing £7 million in revenue or 6.2% of total turnover.
Going forward, Clearly Drinks is expected to generate circa £2 million in adjusted EBITDA (earnings before interest, taxation, depreciation and amortisation) in full year 2025.
Chief financial officer Suzanne Smith told Shares: ‘We are always looking for diverse M&A opportunities to benefit the company and enhance Supreme’s earnings.’
The company is currently bank-debt free with more than £50 million of unutilised borrowing facilities at period end.
Chief executive Sandy Chadha says this puts the company in a good position as it gives the company ‘a strong base for further growth in the long-term.’
AUTUMN BUDGET
The fast-moving consumer products maker has been quick to address the rise in national insurance, the higher national living wage and the vape tax planned for October 2026.
Supreme estimates an annualised increase of £900,000 in its people costs in relation to the national insurance and national living wage increases introduced in the Budget on 30 October.
The company said: ‘Ahead of the ban on disposable vapes coming into effect in June 2025, Supreme has consciously de-emphasised 88Vape disposables during the period, reducing our stock holding.’
In relation to vaping the division excluding disposables, first half revenue was up 1% to £32.2 million compared to £32.1 million last year, while disposables revenue was down 56% to £4.4 million compared to £10 million last year.
EXPERT VIEW
Analysts at Shore Capital were upbeat about the stock: ‘We are very pleased with the Clearly Drinks acquisition and more importantly, its first report, an important piece in the evolution of Supreme into a growing firm: ongoing, facing a major change in the UK vape market, the firm is still using the cash flows from its traditional core to good effect.’
