Breville Group (BRG) – Poised for earnings recovery

Breville Group designs, develops, markets, and distributes small electrical kitchen appliances in the consumer products industry in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. Its products sell under the Breville, Kambrook, Baratza, Sage and Lelit brand names. Breville was founded in 1957 and is headquartered in Alexandria, Australia.

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Breville posted flattish first-half FY26 earnings but performance was a solid achievement in the face of significant US tariff headwinds. Having largely navigated its manufacturing transition, execution risks have diminished materially. The company is well-positioned to return to double-digit earnings growth beginning in FY27. First-half underlying net profit was largely in line with our $98.6m forecast, while global product revenue climbed 11% on a constant-currency basis, led by the Americas, while Europe, Middle East and Africa (EMEA) and Asia-Pacific (APAC) displayed more moderate increases.  Gross profit margins narrowed 130 basis points year-on-year to 35.4% from 36.7% as US tariffs hit home.

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In terms of outlook, the company expects a modest increase in earnings before interest and tax in FY26. Such guidance appears prudent to us given residual risk from the impact of tariffs and the transition to new manufacturing facilities. Overall, as transitional pressures subside, we forecast a return to double-digit earnings growth in FY27, and upgrade our recommendation to Accumulate from Hold.