Breville's Sales Momentum Is Slowing, but Margins Continue To Strengthen

We maintain our AUD 20.00 fair value estimate for shares in Breville following the release of interim fiscal 2023 results. Underlying EBIT lifted 8% on the prior corresponding period, or pcp, to AUD 121 million. Revenue growth slowed quicker than anticipated in the traditionally stronger first half (which includes the key Christmas period). We lower our fiscal 2023 EBIT forecast by 3% to AUD 170 million—near the top of management's guidance range of AUD 165 million to AUD 172 million. Breville declared a fully franked interim dividend of AUD 0.15 per share, flat on the pcp. We forecast total fiscal 2023 dividend of AUD 0.33, representing a payout ratio of about 40% of underlying EPS.