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We remain positive about the batteries, vitamin and vaping supplier’s prospects
Thursday 21 Apr 2022 Author: James Crux


Loss to date: 16.3%

Original entry point: Buy at 187.5p, 27 May 2021

Shares in consumer products supplier Supreme (SUP:AIM) fell after a trading update on 12 April spooked the market.

While Supreme expects to deliver profitable growth for the year to March 2023, the company warned performance will be ‘tempered’ by commodity price inflation within its sports nutrition and wellness division.

Prices for whey, the main ingredient in protein powder, have spiked and Supreme will also feel the pinch from rising wage and transport costs.

Investment bank Berenberg believes the price increases Supreme is having to implement ‘could temporarily weigh on sales momentum’ but argues growth and margins ‘can be recovered once whey prices normalise’.

The warning overshadowed confirmation of a strong performance from Supreme in the year to March 2022.

Supreme expects to report sales north of £130 million (2021: £122 million) and growth in adjusted earnings before interest, tax, depreciation and amortisation from £19.3 million to ‘no less than’ £21 million.

Management expects the vaping division to grow at a double-digit percentage again in 2023, while the batteries and lighting divisions continue to exhibit defensive characteristics.

SHARES SAYS: Look past the short-term noise and stick with Supreme. 

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