THG Divests from Its Ingredients Division and Restricts Price Increases for Myprotein
THG Absorbs High Whey Costs to Maintain Price Stability for Myprotein
In the face of record-high whey protein prices, THG's Myprotein business has been significantly impacted, leading to a substantial decrease in the company's profits. According to recent reports, THG's underlying profit is expected to fall from £37.1m to £24m in the first half of 2025.
Despite these challenges, Myprotein has chosen to absorb the increased costs rather than passing them on to consumers. This strategic move is aimed at prioritizing customer loyalty and market share within the competitive protein market. By limiting price hikes, Myprotein aims to increase its market share and enhance customer loyalty and retention.
The decision to absorb the costs reflects THG's wider strategy to streamline the group and focus on core strengths. This approach is in line with prior discussions with shareholders and will underpin market share growth and operating leverage for the full financial year 2026.
As of 30 June, THG has cash and available facilities of £278 million. Despite the sale of its Claremont ingredients business to Nactarome Group for £103 million, THG maintains a strong balance sheet. The sale is part of THG's efforts to reduce debts and bolster its balance sheet.
The sale of Claremont is expected to reduce full-year adjusted earnings before nasties by £5million to £10million. However, THG returned to revenue growth in the second quarter, and Myprotein unit experienced double-digit nutrition revenue growth across June and July due to recent whey price stability, rising nutrition consumer prices, and its structurally advantaged business model.
THG's net debts are down £20 million on the same time last year at £330 million. THG shares jumped 6.3% in early trading, but remain down roughly 28% for 2025.
Myprotein expects to see growth of 10-12% in the second half of the year, driven by rising demand for protein-enhanced products. The pricing approach is aimed at prioritizing long-term market share gains and customer loyalty. The sale of Claremont to Nactarome Group will not affect the 'key relationship' between Myprotein and Claremont, as both parties will have a long-term supply contract and Nactarome will have broader capabilities.
In conclusion, THG's Myprotein unit is taking steps to absorb the increased costs of high whey protein prices to maintain competitive pricing and prioritize customer loyalty. Despite the profit drop in the first half of 2025, Myprotein expects to see growth in the second half of the year. THG's efforts to reduce debts and streamline operations are expected to position the company for long-term success in the competitive protein market.
Investing in financial strategies for cost absorption and market expansion is crucial for THG in the competitive finance sector, as demonstrated by Myprotein's decision to absorb increased whey protein costs to maintain stability and encourage customer loyalty. The business's focus on market share growth and operating leverage points towards a strategic approach to business finance and investing.
THG's financial approach aligns with its shareholders' discussions, with the ultimate goal of achieving long-term success in the protein market through market share gains, customer loyalty, and the streamlining of operations. This aligns with the broader investment landscape, where companies often prioritize long-term growth over short-term gains.
