Tom Ryder admits he had been \u201choping and praying\u201d the latest update from his sports supplements company Applied Nutrition would push the group\u2019s languishing shares back above its flotation price. His prayers have been answered.<\/p>\n
An upbeat trading statement on Tuesday from the Liverpool-based maker of protein powders and hydration products pumped up shares in Applied Nutrition by 11.9 per cent to 146\u00bep, surpassing the 140p-a-share level at which the company listed last October for the first time since February. <\/p>\n
It is a fillip for Ryder, 41, not least because the ebullient Liverpudlian, who got into the fast-growing supplements industry as a side hustle at the age of 18 while working as a scaffolder, owns a 34 per cent stake in the company he runs. Yet it\u2019s hardly a glowing endorsement of London\u2019s troubled flotations market.<\/p>\n
\u2022 Sales and profits jump at Coleen Rooney-backed Applied Nutrition<\/a><\/p>\n The initial public offering of Applied Nutrition was hailed at the time as a much-needed boost for the City<\/a>. A dearth in listings ever since the collapse of the last IPO boom in 2021 meant the debut of Applied Nutrition, which valued the company at \u00a3350 million, was one of the biggest flotations in London last year.<\/p>\n The fanfare didn\u2019t last long, however. While the shares rose on their first day of trading, the IPO had nevertheless been priced towards the bottom end of the 136p to 160p range that the company had been targeting. After the stock peaked at almost 155p in January, it floundered, even though half-year revenues from the business in April were ahead of the guidance provided at the IPO. <\/p>\n A big concern for investors has been a question mark about the sustainability of Applied Nutrition\u2019s industry-leading margins. Thanks to its focus on business-to-business distribution \u2014 selling its products to gyms, retailers or other specialists \u2014 and manufacturing in-house at its site in Merseyside, it was able to generate a gross margin of about 47 per cent in the first half.<\/p>\n True, Tuesday\u2019s full-year trading update will have assuaged some of the market\u2019s nervousness over whether Applied Nutrition can maintain its enviable physique. Revenues rose by a better than expected 24 per cent year-on-year to about \u00a3107 million, while adjusted earnings increased by about 19 per cent, implying an earnings before deductions margin of 28.9 per cent.<\/p>\n Analysts at Panmure Liberum, a stockbroker bullish on the stock, told clients that forecast-beating figures meant \u201cthe shares deserve to go much stronger\u201d. \u201cWe have been saying for some time the market has this one wrong,\u201d they added.<\/p>\n But, as the analysts have conceded, there are other aspects of Applied Nutrition\u2019s business model that might give investors pause for thought. One is its dependence on its facility on the outskirts of Liverpool, while another is the \u201ckey man risk\u201d represented by Ryder, its chief executive and the driving force behind the company. Its reliance on outside distributors is another potential risk. <\/p>\n Its shares may now be back above their IPO price, but Applied Nutrition\u2019s long-term fitness is still a matter of debate. The stock\u2019s lacklustre performance since the listing will also have done little to improve the health of London\u2019s moribund market for flotations.<\/p>\n Growing pains<\/p>\n A paucity of IPOs is one problem facing Britain\u2019s stock market, another is a string of quoted companies, including the gambling giant Flutter and the building materials supplier CRH, dropping London as their main listing venue in favour of New York in search of better valuations. <\/p>\n They might be joined one day by IWG<\/a>, the serviced offices provider behind Regus, which has a US listing \u201con our mind\u201d but not under active consideration, according to Mark Dixon, its founder and chief executive. <\/p>\n \u201cWe\u2019re a growth company, the US market tends to reward growth more,\u201d he said, as he lamented the \u201cfrustrating\u201d stock market reaction to IWG\u2019s half-year results on Tuesday.<\/p>\n While the business boasted six-month record revenues<\/a> of $2.16 billion and a 6 per cent increase in adjusted profits to $262 million, its shares nevertheless dropped by 12.8 per cent. Investors were rattled by a warning from IWG that full-year profits would be \u201ctowards the lower end\u201d of its $525 million to $565 million guidance range, which it attributed to its plan to further invest in its business. Hence Dixon\u2019s claim that IWG was being \u201cpenalised\u201d by the stock market for having \u201ctalked to more growth\u201d.<\/p>\n Yet this is a company whose share price has effectively moved sideways since mid-2022, when the Covid crisis, which fuelled a boom in working for home, had receded. <\/p>\n \u2022 IWG shares drop 17% after disappointing profit outlook<\/a><\/p>\n Although the pandemic is over, IWG is betting the trend towards flexible working is here to stay and is focusing on opening offices in small towns, suburbs and rural areas<\/a>. The idea is that workers no longer want to undertake lengthy commutes to main offices in big cities and would rather work near home in smaller local sites. Companies seeking to cut costs will also opt for IWG\u2019s services and save on expensive city leases. <\/p>\n