88vape brand
Fast-moving consumer products play Supreme delivered another profit upgrade amid growth across all divisions / Image source: Supreme
  • First half PBT up 180%
  • Full year guidance raised again
  • Outstanding vaping performance

Shares in Supreme (SUP:AIM) surged 16% higher to 127.5p after the fast-moving consumer products distributor delivered another significant profit upgrade for the year to March 2024 amid continued growth across all divisions in the third quarter-to-date.

A leading e-cigarette and vaping market name known for its 88vape brand and the UK’s biggest battery and lighting distributor, Supreme now expects to generate full year sales of around £210 million to £225 million, up from previous guidance of £195 million to £205 million.

The Manchester-based firm also sees adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) coming in between £32 million and £35 million, an increase of around £4.5 million versus previous guidance.

A SUPREMELY GOOD HALF

The upgrade reflects outstanding trading from the core vaping business and a boost from a distribution agreement to supply the ElfBar and Lost Mary disposable vape brands to the likes of Tesco (TSCO), Morrisons, One Stop and WH Smith (SMWH).

Supreme put up what broker Shore Capital described as ‘exceptionally strong’ results for the half to 30 September 2023, with pre-tax profit powering 179% higher to £12.3 million on group revenues up 63% to £105.1 million as the core vaping division delivered an outstanding first half showing.

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PROACTIVE MEASURES

A consultation on possible new UK e-cigarette regulations ending on 6 December 2023 has weighed on sentiment towards Supreme, which supplies disposable vapes to the likes of Tesco, Morrisons and discounter B&M European Value Retail (BME) as well as complete vaping kits and flavoured e-liquids.

Acknowledging the wider concerns of youth vaping, Supreme stressed that it remains ‘fully supportive of any proactive measures or changes in legislation that potentially restricts specific products, packaging, flavours or point of sale in the UK.’

The company is adopting proactive measures to limit the colour of its 88vape packaging and discontinuing coloured hardware for 88vape disposables too.

In addition, Supreme is implementing use of only age-appropriate names to characterise its 88vape flavours.

And it will only trade with retailers that commit to ‘robust age verification controls’ and is urging retail customers to position vapes, where possible, away from confectionery, a category that is attractive to young people.

WHAT DID THE CEO SAY?

CEO Sandy Chadha said Supreme’s record revenue and profit growth has been ‘undoubtedly driven by our established vaping activities, alongside solid sales momentum across the remainder of the business including sales growth in Lighting of 21% and Sports Nutrition & Wellness of 17%.

‘In light of our growing presence across the UK vaping sector, we remain highly vigilant to the growing problem of underage vaping and welcome any preventative measures that prevent the supply of vape products to underage individuals whilst acknowledging the important role that the vape industry will continue to play in delivering the UK Government’s ‘Achieving Smoke-free 2030’ initiative.’

LEARN ABOUT SUPREME

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Issue Date: 28 Nov 2023