THG is set to spin off its Ingenuity arm as it records a dip in profit and revenue

In the half-year to June 30, THG recorded a total revenue decline of 3.6% year on year to £934m, while adjusted gross profit dropped from £424m to £395m.

Sales at THG Nutrition declined 10.9% year on year to £300m, while THG Beauty sales increased 5.7% to £531m.

The group’s external arm THG Ingenuity also recorded a 12.6% lift in revenue to £80.2m. Adjusted EBITDA grew 3.6% to £48.8m.

THG said H1 has been a “more challenging period” for its Nutrition division but it expects the second half of the year to remain its “most profitable and cash-generative period”, adding that “revenue growth and seasonal weighting in Beauty and Ingenuity is expected to largely mitigate the Nutrition decline”.

Ingenuity demerger

The group also announced on the London Stock Exchange that it is “actively undertaking” work to help facilitate the demerger of THG Ingenuity.

It is currently weighing up options and has no timescale on when the spin-off could be complete. It is also subject to shareholder approval.

Post a demerger, the group would consist of THG Beauty and THG Nutrition.

The group is also looking at transferring its listing from the “equity shares (transition) category of the Official List to the equity shares (commercial companies) (“ESCC”) category of the Official List”.

Subject to the transfer becoming effective and other conditions being met, it is expected that THG will be eligible to be included in the FTSE UK Index Series.

THG chief executive Matthew Moulding said: “The group continued to deliver against its strategic priorities through H1, with the performances of both Beauty and Ingenuity particularly strong. Reporting another six-month period of continuing sales and adjusted EBITDA growth was especially pleasing given the FX headwinds suffered within our Nutrition business, which negatively impacted H1 profitability by a further £5m. Local manufacturing and fulfilment is now live in Japan which will steadily scale to reduce exposure.

“The major rebrand of our Myprotein business is nearing completion and despite the transitory rebrand disruption this has brought, we have seen positive reactions from global consumers, major offline retailers and licensing partners alike.

“Momentum in Nutrition is especially pleasing, with an expected return to revenue growth in September, providing a strong platform for both peak trading and the year ahead. 

“Following the completion of the Financial Conduct Authority listing regime review, we are taking the appropriate steps to transfer to the ESCC category. We welcome the output to simplify the listing regime and expect the group to be eligible for inclusion in the FTSE UK Index Series.

“Finally, after extensive discussions with shareholders over the past 12 months, THG is progressing options to demerge THG Ingenuity, leaving our highly profitable and cash-generative global Beauty and Nutrition businesses within THG Plc. The appropriate tax clearances have been received, while the necessary separation work has previously been undertaken.”