Bremworth Limited Analysis

Overview

Overview

Synonymous with quality, Bremworth has been voted New Zealand’s most trusted carpet brand* for the last eight years. With manufacturing facilities in Napier, Whanganui and Auckland, Bremworth employs over 400 people and is committed to sourcing its wool from New Zealand growers.

In 2020 the company began to implement its new purpose-led strategic plan when it announced it was exiting synthetic carpet production to focus on redefining Bremworth as a premium design and natural fibre company.

Progressive new initiatives are plotting a fresh course for Bremworth’s future. The team at Bremworth invite you to join them to find a more sustainable way.

Key Milestones :

November 2020 – Re-launched the Bremworth brand

December 2020 - Secured funding to execute the strategic plan, Right-sized the organisation

April 2021 - Secured a $1.9 million grant from MPI’s Sustainable Food and Fibre Futures (SFFF) fund to support Bremworth’s $4.9 million sustainability programme

May 2021 - Celebrated last ever synthetic carpet production

June 2021 - Commenced “Let’s Go Good Together” marketing strategy, Signed up to New Zealand Farm Assurance programme, Appointed new CEO Greg Smith

Markets:

The company is mainly focused on the Australasian woollen carpet and rug markets, but also exports carpet to the USA and Canada where it has identified opportunities in the premium end woollen segments of these markets.

Our growth strategy

• To grow the wool flooring market
• To grow our share of the market
• To expand our presence
• To focus on design-led innovation

Performance

The following information was extracted from Bremworth Limited's half year results, released on 28 February 2025:

We are pleased to update you on our operating and financial performance in the first half of FY25.

While it is still early days, there are positive signs that the business is recovering:

• Our hybrid supply chain is working and we have invested in inventory for future growth;
• We launched new ranges across our Bremworth-branded carpets as well as new white label ranges for our retail partners;
• Revenue growth has returned to the business, particularly strongly in the first 7 weeks of Q3;
• We’re re-entering the commercial segment in Australia, exploring new contract manufacturing opportunities and making progress on opportunities to enter the US market, albeit in a deliberate and controlled way.

While there are reasons to be positive, we experienced some margin compression in our carpet business (challenging market conditions and supply chain inefficiencies) and cash outflows in the first half of FY25. The cash outflows were largely due to the decision to invest in growth.

Management is confident that margins will recover and cash outflows will materially reduce over the next 12-18 months as we leverage higher inventory levels, execute on cost savings and grow the business.

• Revenue up ~8% in 1H25 vs $39m in1H24
• Regaining market share in Australia (post-Cyclone)
• Stable NZ carpet business, despite economic conditions
• Strong Elco performance
• Overall gross margin % in line with 2H24. Margin compression vs.1H24 related to:
• Product mix shift to lower margin products, including Elco revenue
• Increase in inventory provisioning
• Excluding inventory provisioning, carpet margins are broadly stable
• EBITDA reduction vs 1H24 also impacted by increased distribution costs that support new product offerings in Australia