KITW Kitwave Interim results update.

Below are just my thoughts as to the h1 results today. None of this is a recommendation to buy or sell, just my worthless opinion. Do your own research and make your own decision, this is not advic

Highlights

Revenues up 23%

Gross margins up from 19.8% to 21.6%

Profit Before Tax up 48% to £8.3m

Dividend increased 50%

Dilute EPS  8.7p v 6.3p last year, a rise of 38%

H2 normally represents over 65% of total earnings so the current forecasts look very beatable in my opinion.  H1 divi rise means the forecast div has almost been met on a trailing 12 months basis hence the full year divi likely to be somewhat higher than current forecasts in my opinion.

Good cash generation continues which should allow further acquisitions from cash generated going forward.   Recent acquisitions have integrated well.  Strong current trading means they are confident of beating the guidance they set out at the start f the year.

Paul Young, Chief Executive Officer of Kitwave, commented:

 "We are pleased to report continued strong progress across the Group in the six months ended 30 April 2023. With trading in the wholesale sector typically weighted towards the second half of the year, we are confident that this positive momentum will continue throughout 2023, and results for the full financial year will be ahead of market expectations that were established at the start of the financial year.

 "A significant highlight during the period was the Group's successful acquisition and integration of WestCountry into our Foodservice division, where we are now able to deliver high-quality fresh produce throughout the South West. This acquisition demonstrates the strong results that can be achieved when taking advantage of the considerable opportunities available in the UK's fragmented wholesale market. 

 "We believe that our unwavering focus on operational efficiency, strategic investments, and customer satisfaction, means we are well placed to drive sustainable growth, both organically and through acquisitions to deliver value for the Group and its shareholders."

Electronic and online orders was a highlight, now at 44% with average order values compared to more traditional methods remaining 8% ahead due to the additional e-commerce functionalities of web platform.  The company says it will continue it’s buy and build strategy.

My take away from the results was the very confident 50% hike in the H1 divi.  If this percentage rise was applied to the whole year then the yield would have stood at 5%+ last night. It’s unusual for a co to raise an interim divi much greater percentage than the final divi so this shows confidence going fwd to be able to pay this amount and do acquisitions from cash generation in my opinion.

All in all a very decent set of results and I look forward to further newsflow over H2.

The shares have responded with a circa 7% rise this morning. The chart showing a very positive curve upwards in my opinion.