Applied Nutrition has increased its full-year profit outlook, driven by a significant surge in revenue fueled by sustained demand for its protein products. The company, which has backing from Coleen Rooney and JD Sports, reported a 50% revenue increase to £160 million for the fiscal year ending July 31.
For the current fiscal year, Applied Nutrition now projects adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to grow by 40% year-on-year, reaching £43.3 million. This figure surpasses market expectations of £42 million, not including the impact of its June acquisition of U.S.-based Nutrablend. The company further forecasts adjusted earnings of £49 million and revenues of £205 million for the upcoming year, both exceeding current market predictions.
Despite the positive outlook, Applied Nutrition cautioned that rising whey protein costs could reduce profit margins in the coming year. Whey protein prices have seen an increase in recent years, partly attributed to the growing use of weight-loss drugs that alter user diets and exercise routines. The company expects its Critical Whey powder relaunch to contribute to a larger proportion of sales from whey-based products.
The acquisition of Nutrablend is also anticipated to boost U.S. sales in the current year, though it may exert some pressure on the company's EBITDA margin. However, analysts at Peel Hunt see potential upside in the U.S. market, citing the significant capacity of its new manufacturing facility for white-label production.
Applied Nutrition's shares increased by 0.6% to 3223.5p, extending their year-to-date gains to over 26%. Analyst Adam Tomlinson of Berenberg noted the company's "early-stage global growth potential" but emphasized that investors will be closely monitoring margin stability. He stated that maintaining a premium valuation rating would require management to demonstrate consistently healthy and stable underlying margins.