Shriro Holdings (ASX:SHM) 1H20 results & outlook


by Rachael Jones

Shriro Holdings Limited (ASX:SHM) CEO Tim Hargreaves talks 1H20 results, demand for the company's range kitchen appliances and consumer goods, the impact of COVID-19, strategy and outlook.

Rachael Jones: Hello. I'm Rachael Jones for the Finance News Network. Joining me today from Shriro Holdings (ASX:SHM) is CEO Tim Hargreaves. Tim, welcome to FNN.

Tim Hargreaves: Thank you very much.

Rachael Jones: Now, first up, Tim, for our viewers, could you just give us a brief introduction to the company?

Tim Hargreaves: Well, not many people, Rachael, have heard of our company, Shriro, but most people would have heard of the household names that we either own or we distribute. So, we're a mixture of home brands, or our own brands, and distribution. Our own brands include Everdure by Heston barbecues. Our cooking appliance brands include Omega cooking appliances and Robinhood. And our distribution brands, we have a partnership with Casio, which include G-Shock watches, musical instruments, and calculators. And Blanco cooking appliances, sinks, and taps. And Pioneer in New Zealand are DJ equipment and audio equipment. So, we cross a variety of different product groups and countries, so we operate in Australia and New Zealand, and in 28 countries around the world with our Everdure by Heston barbecue range.

Rachael Jones: Thanks, Tim. Now, before we talk about the first half ‘20 results, can you just give me some indication of the key drivers of your business?

Tim Hargreaves: The key drivers have been our export business in the first half, Rachael. Our business was up 64 per cent PCP for the first half, which is driven around our barbecue business in Northern Europe. So, people are staying at home, people aren't out entertaining, they're entertaining more at home, and that's driving our business nicely. The number two is that people are staying at home and cooking in Australia, so we're seeing some of those trends in our cooking appliance business going forward.

The other component is that we're looking at how we can reinvest our money a little bit better as well. So we're looking at some of the cost savings that we've dedicated over the last 24 months in our business, and looking at reinvesting some of those in the growth cycle of our business, particularly the digitisation of our business.

So at the front end, we're driving more people to our website through our G-Shock watches, and some of the learnings we've made with G-Shock watches and influencers, and driving them to our website through Instagram and Facebook. And we're looking at the drivers of that now in our cooking appliances and our barbecue business.

The other component is, we look at the back end of our business and we can just run our business more efficiently. So, we're driving at the front end, and we're looking at how we can make our business more efficient from the back end.

Rachael Jones: Now let's talk about your first half results. Let's talk about the financials.

Tim Hargreaves: Well, we had a record first half, and really, our revenue was only up 1.8 per cent, but considering our New Zealand operation was shut down completely for five months [sic: "weeks"], and the shutdown of the retail store network in Australia, I'm pretty pleased with that. I mean, on the back of that, our barbecue business on export in the Northern Hemisphere Europe was so strong in that part of the world.

So that was one. The financial drivers outside of that were the cost savings in our business as well. Our EBITDA result was up 33 per cent on last year. And I think we're placed in the right position now with our balance sheet, it's clean, there's no intangibles, and we had $20 million in the bank at the end of June.

Rachael Jones: Now let's talk about strategy and outlook. What can you expect to see over the next six months?

Tim Hargreaves: Well, the next six months is COVID-related, of course. And let's see how the consumer sentiment sort of ends up in that business. From there, we're going to continue to drive innovation of our products. So, we look at some wonderful brands. You look at brands like Breville and Dyson, they innovate, and we want to see that price equation be at the end of the discussion with the consumer. That helps us bring innovation to whatever product category that we're in, be it in distribution or be it in our own brands.

If we look at our own brands, we've won some wonderful awards around the world for our barbecues. In the USA, we won the best charcoal barbecue in 2018. I mean, to go to the US, which is the home of barbecuing, and for a small listed Australian company to go ahead and produce a product that was recognised as a wonderful, innovative product, that's helped us in growing that business.

The other component is we've got a good balance sheet, we've got money in the bank, and we'll be looking at growing our business organically through our brands that we own and the brands that we distribute, but how we can look at growing overseas and possibly even with acquisitions.

Rachael Jones: Fantastic. And to the last question now, Tim, is there anything else you'd like to add?

Tim Hargreaves: I think Shriro is an interesting company for investors to look at. We operate in a variety of fields. We're not wedded to one industry or the other. We operate in discretionary, home appliances, office products. We operate in Australia, New Zealand, and 28 countries around the world. So, there's diversity.

Management are long-term players, Rachael. I mean, I've been with the company for 25 years. Our company's 40 years old. We've been listed for five years. We've got an experienced board who are very engaged with our business. And we've got some pretty good returns. I mean, our returns over the last couple of years have been somewhere between 8 per cent and 9 per cent on our current share price, so that's terrific, and fully franked. We've got no debt.

I think we're now in the position where we can grow our business. I think, with the cost cuttings happened, we're ahead of that cycle, we believe, and now we believe we can really reinvest in our business going forward, to drive our business forward.

Rachael Jones: It's very exciting times. Tim Hargreaves, thanks so much for the update today.

Tim Hargreaves: You're welcome.