THG shares fall on split plans By Investing.com

Investing.com — Shares of THG (LON:) fell on Tuesday after the company said it is reviewing potential structures to dissolve THG Ingenuity.

At 6:52 am (1052 GMT), THG was trading 9.6% lower at £58.10.

The split would leave THG Beauty and Nutrition as standalone businesses, with Ingenuity operating independently.

“We see this as a positive step in the long-term story of THG shares,” analysts at Barclays said in a note.

While THG has obtained tax clearances from HMRC, no specific timeline for the split has been provided.

“Cash wise this would be quite substantial as almost £80m of their £100m investment is in their Ingenuity business,” analysts said.

The company also reported its half-year results, THG’s Nutrition division, including the Myprotein brand, underperformed with revenue down 8.5% year-on-year at constant currency.

The main factors behind this decline include foreign exchange headwinds, particularly from the weakening of the Japanese yen, and disruptions from the Myprotein rebrand, which resulted in lower-than-expected average selling prices (ASPs).

ASPs fell 11% from last year due to inventory disruptions, although the company is optimistic about a turnaround as the rebranding efforts wrap up.

THG has cut its FY24 EBITDA estimate for Nutrition, with the company now expecting to hit the lower end of consensus at around £134m, which is around 8% below market expectations.

Despite the nutrition woes, THG’s beauty and ingenuity divisions offered a more optimistic outlook. Beauty revenue rose 3.8% in the first half at constant currency, with recovering production volumes and cost-saving measures improving EBITDA margins.

Meanwhile, THG Ingenuity’s external revenue rose 14.1%, although the overall division saw a 4.2% decline due to internal restructuring.

“We cut our PT by c9% from 101p to 92p after reducing our FY24 nutrition adjustment. EBITDA by c14%, with a margin of 11.5%,” Barclays said.