Conviviality shares slide as earnings fall

Shareholders in independent alcohol and impulse products wholesaler and distributor Conviviality watched its share price plunge almost 10% on Monday morning, after it announced its results for the 26 weeks to 29 October early in the day.

The AIM-traded firm said it continued to trade in line with the board's expectations for the full year.

It claimed to have “robust” half-year results with an increase in revenue and adjusted EBITDA, with profits reflecting the phasing of cost synergies into the second half of the year.

Revenue was up 9.2% to £836.3m, while the company’s gross margin fell 0.3 percentage points to 12.5%, which the board put down to increased sales to large national account customers in the period.

Adjusted EBITDA rose 1.7% to £23.3m, while adjusted profit after tax fell 1.6% to £12.3m and its adjusted fully diluted earnings per share reduced 5.6% to 6.8p.

On a statutory basis, profit after tax was down 10.3% to £5.2m, with fully diluted earnings per share off 12.1% to 2.9p.

Net debt at £133.3m was 3.7% below net debt a year earlier of £138.4m.

The board confirmed its interim dividend was increasing 7.1% to 4.5p.

“Our customers and franchisees have continued to recognise the strength of the Conviviality proposition and the opportunities a single supplier and distribution solution affords them,” commented chief executive officer Diana Hunter.

“This has been evidenced by our above market growth in both the on trade and the off trade during the period.”

Hunter said the board made “deliberate “choices to successfully grow market share and enhance the quality of future earnings by agreeing long-term contracts with the firm;s larger customers, and securing new national account customers.

“These gains in market share coupled with our continued strong sales demonstrates our competitive advantage, the broad customer base we have developed and the robust nature of Conviviality as the UK's leading drinks wholesaler, distributor and solution provider to our customers.

“As previously highlighted, cost initiatives for the second half of the current financial year provide confidence for both achieving current year board expectations, as well as the Group's longer-term performance,” Hunter added.

As at 1003 GMT, shares in Conviviality were down 9.92% at 322.5p.