Breville’s FY24 result highlighted better 2H24 sales trends in EMEA and the Americas. The company is likely to deliver good revenue growth in FY25e from these regions given new product launches and extended geographic reach. Breville is investing for growth with increased product development costs, while at the same time generating good cash flow.
The spike in spot sea-freight rates is likely to remain topical over the next few months and add to concerns about retail profit margins in FY25e. Our feedback is that spot sea freight rates for Australian importers are now close to 3x the low point seen only 12 months ago. The good news is many retailers have 12-month contracts. The bad news is that it looks like a step-up in freight rates is coming either way as we move through FY25e and adds risk to earnings. The retailers most exposed to higher sea freight rates are Nick Scali, Wesfarmers and Super Retail Group.