Science in Sport ends year in line with expectations

Athletic nutrition company Science in Sport said in a trading update on Wednesday that despite a tough economic and supply chain environment, it performed broadly in line with expectations in 2022, achieving a 1.5% rise in revenue to £63.5m.

The AIM-traded firm said a stronger margin performance in the second half was due to the new Blackburn site, which delivered significant logistics efficiencies.

Coupled with the delivery of sustainable cost savings across the business, margins were in line with expectations.

Science in Sport said the Blackburn asset was planned to be the bedrock of further improvements and strategic advantage in the global sports nutrition sector from 2023 onwards.

The company executed a wide-ranging restructuring in the period, including strategic investments, with a protein bar line commissioned in Blackburn and now fully operational, eliminating proposed substantial 2023 co-manufacturing cost increases and contributing significantly to profitability.

Post-period end, the firm’s US business transferred to ‘The Feed’ this month, an online distributor of endurance nutrition brands in the region.

As well as accessing the core consumer market, the deal would result in a strong improvement in expected cash generation for 2023, the board said.

A strategic partnership was also agreed for the company's marketplace business with Flywheel Digital.

Sales to consumers in 2023 were showing good growth, and the board said it expected to see outperformance from March due to the new partnership.

People costs for 2022 were significantly under budget, with the company expecting to hold that flat in 2023, despite wage inflation.

It added that 2023 would also see a solid reduction in overheads versus 2022.

Capital expenditure would be at an all-time low, given the company had exited the strategic investment phase in supply chain and technology.

“Management is optimistic about the prospects for 2023,” the board said in its statement.

“Macro factors including Covid-19 in China and Amazon global inventory reduction are alleviating.”

Science in Sport said retail in all regions was in line with its expectations for growth, with the UK particularly showing a strong start to the year.

“Margins are strongly improved due to initiatives including the above items, and a second wave of price increases beginning to contribute.”

At 1127 GMT, shares in Science in Sport were up 4.4% at 13.05p.

Reporting by Josh White for Sharecast.com.