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Breville To Jack Up Prices Due To Inflation

Breville reported a 25 per cent rise in profits for the first half of FY22, but inflationary pressure, coupled with supply chain constraints and increased freight costs, means the company will have to raise the prices of some of its most popular products.

Breville’s profits leaped to $77.7 million, sales jumped 24 per cent to $878.7 million, and the company saw double digit sales growth across the Americas, the Asia Pacific and Europe, and Middle East and Africa. Despite this, Breville boss Jim Clayton confirmed to The Australian that it would most likely increase pricing “on a small group of products”, a practice it started in the second half of 2021.

“So in the first half, we put through what I would call single digit price increases on some products and some geographies. What we could do in the second half, not decided yet, but we could in the second half again, on a small group of products, put through some price increases, like ones that we didn’t do in the first half,” he said.

He also said the compact size of Breville appliances means container shipping price rises aren’t as expensive for them as for other companies.

“Because the problem is not as big for us as it is for most people, for most companies, it allows us to be very tactical and thoughtful with these (price rises).

“So it is possible that in the second half if the inflationary pressures continue from behind, yeah, we’ll find out soon enough, then we may move forward with another very specific products and specific markets based … we may end up with a kind of a single digit price increase on that product.”

Clayton figures that the work-from-home boom means people will be spending more on kitchen appliances anyway.

“Over the last two years we all got the opportunity to adjust to work from home. And then I think that’s got everyone focused on the quality of what they can do at home and I think that in a sense it has been one of the core drivers of our revenue … is people deciding to in a sense, to upgrade the quality of what they’re making at home and so forth, and we’ve certainly benefited from that realisation.

“So it’s really whatever is important to the end customer to improve the quality of their outcomes at home. That’s what leads them to buy Breville products and because our innovation is all focused on improving outcomes at home. And I think that’s helped us succeed over the last couple of years.”

There were problems to tackle, with inflationary pressures feeding into the category and leading to Breville likely passing on some price increases in the second half.

Breville forecast annual pre-tax earnings to be around $156 million, which jibes with market consensus.

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