Applied Nutrition shares fell on Monday after confirming a bumper first half, with revenue up 57% to £74.5m and adjusted EBITDA rising 56% to £21.5m, but signalled that the second half will be materially softer as it navigates a more front-loaded trading pattern and disruption in the Middle East.
As a result, the FTSE 250 sports nutrition group maintained its full-year revenue guidance at approximately £140m, implying second-half revenue of around £65.5m, a notable step down from H1 and well below the growth rate seen in the first six months.
Applied Nutrition shares were down 14% at the time of writing.
Management attributed the skew to a better-than-expected peak health and fitness trading period in January and accelerated demand for several new product launches, both of which pulled sales forward.
The group also flagged current disruption to shipping routes and purchasing activity in the Middle East, warning it expects some reduction in volumes into the region during H2.
It says the impact is not enough to alter full-year guidance, but given the group’s plans to push into new geographies across Asia, Latin America, and the Middle East, keeping guidance flat will seem like a downgrade to some investors.
The first-half performance itself was strong across the board. UK like-for-like growth was driven by expanded listings with grocers, health retailers, and discounters, headlined by a first out-licensing deal with Morrisons for a high-protein food range. Latin American sales surged 110% year-on-year, and the reformulated Critical Whey protein posted sales 128% ahead of the prior year period.
Free cash flow conversion did drop sharply, however, falling to 51.3% from 84.0%, with free cash flow declining to £7.9m from £8.9m despite the jump in profitability. Construction has since begun on a new global distribution centre and factory expansion that will lift capacity to support around £300m of annual revenue.
Thomas Ryder, CEO of Applied Nutrition, said: “We have continued to execute against our strategic priorities in the period, with deeper engagement and expanded shelf space with existing customers, new customer wins and entry into new channels, continued international rollout into new geographies, while further progressing the build-out of our D2C offering.”