Science Sprt Share News (SIS)

(Sharecast News) - Performance nutrition company Science in Sport updated the market on its trading on Wednesday, reporting that it was performing "well", driven by continued momentum in its online business and "substantial improvements" in its gross margins, with both factors leading to profitability on an EBITDA level for 2020.
The AIM-traded firm said online channels were performing "very strongly", which had offset some of the downturn caused in its retail channels by the Covid-19 pandemic.

Total online revenues were ahead 39% year-on-year at £23 million for the 11 months to the end of November, with sales expected to grow to about 51% of total revenue for the full year to 31 December, compared with 38% in 2019.

The board said "very good" progress was made with its PhD.com digital business, up 108% to the end of November compared to the same period in 2019.

Its US business was up 32% year-on-year, with cash burn "significantly reduced", given the gross margin improvement to 74% and a "streamlined" operating model.

Group gross margin for the year was forecast to be up by four percentage points to around 48%, compared with 44% in 2019.

Gross margin to-date for the second half was up a further two percentage points to 50%, which the company saw as a "sustainable" base.

The improvement was driven by its online pricing and promotion strategy, together with strategic supply chain initiatives flowing through in the second half of the year.

Given strong momentum in online channels, and some recovery in retail following the "severe downturn" in April and May, Science in Sport said it expected group revenue for 2020 to be in the region of £49.8m, down from £50.6m in 2019.

It said it expected to report underlying EBITDA of approximately £1m for the year, net of Covid-related exceptional costs of £0.3m, swinging from a full-year loss of £0.3m in 2019.

The board said the business had generated a positive EBITDA each month from June onwards.

Its cash position was described as "strong", with Science in Sport expecting to close the year with around £10m, having generated cash of around £0.5m in 2020 after capital investment in its production capacity and technology platform.

"We bounced back strongly following our decisive actions in March and April to restructure the business and strengthen the balance sheet," said chief executive officer Stephen Moon.

"Our focus has been accelerating our long-term growth strategy and investing in our online business, and this has successfully delivered for us.

"We have invested in technology and talent to drive our online business across global territories for 2021 onwards, and we have continued to drive innovation and brand equity to underpin our premium margin business."

Moon said a new supply chain unit was planned for late 2021.

"This will build further on the substantial progress made in gross margin during this year, and we expect to make progress throughout the strategic planning period.

"Whilst it is too early to reinstate guidance for the longer term, once the Covid-19 pandemic abates, we are well positioned to take advantage of profitable growth opportunities in all major global regions."

Science in Sport said it would issue a pre-close trading statement in early January.

At 0923 GMT, shares in Science in Sport were up 8.77% at 31p.