Key facts
- Applied Nutrition's adjusted pre-tax profit increased by over 40% in the year to August.
- The company anticipates a 13% earnings growth to £49m in the next fiscal year.
- Whey protein prices have surged five-fold, impacting Applied Nutrition's core ingredient costs.
- Revenue is projected to exceed £200m for the first time, with pre-tax profit nearing £50m.
- The popularity of weight-loss drugs has driven increased demand for protein supplements.
Applied Nutrition has cautioned that a substantial increase in whey protein prices is expected to reduce its profitability in the upcoming year. The company reported that its adjusted pre-tax profit grew by over 40% in the 12 months ending August, exceeding market expectations. It also forecasts a further 13% increase in earnings, reaching £49 million.
The surge in whey protein prices, which have risen five-fold, is attributed in part to increased demand driven by the popularity of weight-loss drugs such as Wegovy and Mounjaro. Users of these medications are increasingly turning to protein-heavy diets and weight training to preserve muscle mass, boosting demand for whey protein, a key ingredient in shakes and supplements.
Despite the cost pressures, the Merseyside-based firm, established in 2014, unveiled forecasts that surpassed analyst expectations. Revenue is predicted to surpass £200 million for the first time in the company's history, with pre-tax profit expected to be just under £50 million. Applied Nutrition's shares saw a 7.5% increase at the market open following the announcement.
The impact of higher whey prices is another example of how the widespread adoption of weight-loss drugs is affecting various businesses. Food companies like Nestle and Pepsico have introduced nutrient-rich meal options to cater to individuals with reduced appetites. Additionally, analysts and investment managers have noted potential slowdowns in growth for large alcohol companies due to these drugs' effects on consumption, with Terry Smith of Fundsmith selling his stake in Diageo citing this impact.