Trilogy International delivers 'modest growth'

Trilogy CEO Angela Buglass. Photo / Supplied

Trilogy International lifted first-half profit 17 per cent as the scented candle and beauty products maker faced lower interest costs and earn-out payments, although the firm's underlying earnings were hit by skinnier margins.

Net profit increased to $4.1 million, or 5 cents per share, in the six months ended September 30 from $3.5 million, or 5 cents, a year earlier, the Auckland-based company said in a statement. That was bolstered by finance costs shrinking 22 per cent to $718,000 and the final payment on its CS & Co acquisition almost halving to $141,000.

Earnings before interest, tax, depreciation and amortisation fell 13 per cent to $6.3 million on a 4 per cent increase in revenue to $49.7 million. Trilogy had anticipated revenue would exceed $50 million and ebitda would beat $6 million.

"TIL delivered modest growth in the first half, despite retail pressure in its home markets of Australia and New Zealand," chief executive Angela Buglass said. "Cost impacts and short-term quality issues impacted TIL group profitability, however, we have already implemented initiatives to accelerate growth in the second half."

Trilogy warned the market first-half earnings would likely decline when it released guidance in September, citing the tough trading conditions in Australasia. That triggered a 13 percent decline in the share price at the time, which the stock has since recovered. It opened today down 0.4 percent to $2.57.

The company said the second half started well with retail expansion in the US and UK, and Ecoya is well positioned with orders and sales leading into Christmas in line with normal seasonality. Trilogy's distribution business CS & Co sales remain weighted to the second half, and the company said it's confident of good retail sales through the Christmas and summer trading period.

Trilogy affirmed annual guidance for revenue and ebitda to gain 10 percent.

Its natural products division increased revenue 4.8 percent to $18.7 million in the six months, largely driven by international market growth. During the period a more structured distribution channel in China cross-border e-commerce became more formalized, it said.

The home fragrance and bodycare division - which includes Ecoya - delivered $8.3 million in revenue, down 7.3 percent. Some one-off issues around Ecoya glass and wax supply constraints resulted in slower than anticipated revenue growth and created some one-off costs, reducing profitability. However, the successful brand relaunch in September has created momentum going into the second half, with new market opportunities being negotiated, it said.

The first three months of recently acquired skincare brand Lanocorp delivered $3.1 million in revenue and ebitda of $700,000. In June, Trilogy announced it would spend $13.8 million buying control of smaller rival Lanocorp's New Zealand and Australian businesses, whose suite of beauty products include Lanocreme.

CS & Co delivered $23.9 million in revenue, flat on the prior period. Its ebitda was impacted by margin compression due to the weakening New Zealand dollar against the Australian dollar, the company said.