- Second warning in as many months as lighting sales slide
- Slashes dividend to earnings payout ratio
- Stock has lost 30%-plus since its IPO in February 2021
A warning on fiscal 2023 revenues and profits cast a long shadow over vaping kit supplier Supreme (SUP:AIM), sending the share price tumbling.
The company behind the 88Vape brand said revenues and underlying earnings were likely to be below last year and below previous market expectations for the current year, which runs to 31 March 2023, due to a slowdown in lighting sales.
Supreme also plans to slash its dividend payout ratio from this year onwards from 50% of earnings per share to a minimum of 25%.
As well as vaping equipment, Supreme sells batteries, lighting and health food supplements.
Today’s warning will come as a big shock to investors considering the company cut guidance in April because of rising raw materials prices.
STOCK DOWN 30%-PLUS ON 2021 IPO
Supreme was the first AIM IPO of 2021 as markets began to stabilise following the worst of the pandemic, listing shares on the UK’s junior market at 134p.
The stock made impressive early progress, hitting a peak 244p on 31 December 2021, but the price has slumped this year.
In response to today’s alert, Supreme shares crashed 28% to a low of 90.75p, more than 30% below its listing price.
Fans will point to steady progress last year, with the company reporting organic growth of 7% as revenues rose to £130.8 million, with the company noting new customer momentum.
This helped vaping sales increase 10%, albeit, to a still relatively small £4.1 million, although 30%-odd growth is anticipated this year.
Nutrition and wellness sales soared 132% to £9 million.
Adjusted pre-tax profit increased 6% to £17.4 million and EBITDA (earnings before interest, tax, depreciation and amortisation) rose 9% to £21.1 million.
A final dividend of 3.8p per share has been declared for 2022, bringing the overall annual payout to 6p per share for the year, but the lower dividend-to-earnings payout ratio will cap the stock’s attraction for income fans.
Supreme said it believes acquisitions ‘can drive better rates of shareholder return compared to servicing its existing dividend commitments.’
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