Breville scores big as yanks flock to fancy coffee machines

Americans have fallen in love with home coffee machines, which has brewed up a surging profit and record sales for Breville, once famous for its toasters.

Breville CEO Jim Clayton at their offices in Alexandria, Sydney. Picture: John Feder/The Australian

Coffee lovers in the US have seized upon Breville’s growing range of specialist coffee machines to drive double-digit growth for that category, while across the globe consumers put aside cost of living concerns to buy its toasters, juicers and food processors.

The coffee boom in North America was driven by a strong market share through its well-known Breville brand and its recent purchase of Italian coffee machine supplier Lelit, while the entry of its coffee machines into US retail giant Target bolstered sales.

And as the tastes of US coffee drinkers became more sophisticated they were happy to spend up on coffee machines and made a line for the Breville brand, with Breville looking to have outperformed and outsold major rivals such as DeLonghi in the key Americas market.

New product launches for its range of kitchen and benchtop cooking appliances, a strong second half, as well as strong cash flow and a tight control of costs further enhanced the bottom line with Breville’s earnings overshooting market expectations.

Breville, whose largest shareholder is billionaire Solomon Lew’s Premier Investments, on Wednesday posted a 3.5 per cent rise in full-year sales to $1.53bn – a record result – as net profit rose 7.5 per cent to $118.5m. Pre-tax earnings growth of 7.9 per cent was ahead of consensus and guidance for 5 per cent to 7 per cent growth.

The group’s revenue has now more than doubled over the last five years with strengthening sales in the second half of 2024, led by double-digit revenue growth in the Americas, Europe and the coffee category.

The company declared a final dividend of 17c a share, up from 15.5c, and payable on October 10.

“A solid year of performance with a marked strengthening in the second half,” said chief executive Jim Clayton, reflecting on the full-year performance.

“The group delivered 8 per cent EBIT growth, slightly above the top end of guidance, against a subdued consumer backdrop. Overall, the strength of our new product launches, expansion of new markets and the continuing coffee tailwind supported this top line growth as cost-of-living pressures … weighed on the business.”

Mr Clayton said the kitchen appliance maker’s coffee machines were gaining traction among US drinkers, especially as they became more enamoured with the coffee machines on offer and demanded better quality brews from their home machines. A Breville coffee machine might not be their first coffee appliance when venturing into the category, but eventually many landed on the brand.

“We grow because the market grows, we are rarely, I think, a consumer’s first coffee machine, or probably their third or fourth … they might have started with drip coffee, they started somewhere else and then decided that coffee was important enough to them that they were going to start moving up the quality curve,” he said.

The results were well received by investors, who pushed Breville’s shares up 5.4 per cent to $31.23 in a flat market on Wednesday afternoon.

Across its key regions, the Americas’ revenue rose 4.9 per cent to $735.5m, Europe sales increased nearly 14 per cent to $325.2m, and in the Asia Pacific region sales fell 5.8 per cent to $275.4m.

Breville’s performance in the US was a standout, as revenue in the Americas rose 2.9 per cent in constant currency for the full year, strengthening to 12 per cent in the second half as all categories improved their growth rate with strong double-digit growth in coffee and food preparation moving back into growth supported by strong new product development.

Mr Clayton said its Australian and New Zealand arms had improved and showed recovery in the second half, but that the company’s performance in distributor markets in Asia was weaker.

Breville did not offer a forecast for 2025 but said the year ahead resembled 2024, with macro headwinds and uncertainty playing against company specific tailwinds, including new product launches and fast-growing new geographies.

“We enter fiscal 2025 with some momentum on the top line, our new product development pipeline continuing to release, new markets outperforming and our solutions offerings developing. We will continue to plan inventory for accelerated growth, whilst at the same time managing costs to protect against downside risks.”

“It is too early to predict how these forces will play out across the whole year, but our expense budget is again set with flexibility to deliver EBIT growth under a range of probable revenue and cost scenarios,” the company said.