THG (LON:THG) reported higher first-half revenue, a sharp increase in adjusted EBITDA and an improved free cash flow position as the company continued to simplify its operations around its Nutrition and Beauty businesses.
Group revenue rose 7.2% to £828.7 million in the first half of 2026. Adjusted EBITDA reached £42.8 million, more than double the prior-year level after adjusting for the disposal of Claremont Ingredients, while last-12-month EBITDA stood at £95.4 million at the end of June.
The company said lower capital expenditure and lease payments following the Ingenuity demerger, debt refinancing through the end of 2029, selective asset sales and lower cash interest costs have improved its cash-generation profile. THG reiterated its expectation for full-year positive free cash flow of £25 million to £35 million.
Nutrition growth and whey-cost outlook
THG said its Nutrition division benefited from an omni-channel strategy that delivered revenue growth in online and offline channels. Myprotein sold approximately 58.5 million branded products globally during the first half, compared with 37.2 million in the same period a year earlier, representing 57% growth in branded unit volumes.
The company said it believes Myprotein is the world’s largest sports nutrition brand by unit volume and sells at least twice as many products as its nearest global competitor. It expects the brand to sell about 130 million branded units during 2026.
Management cited growing consumer interest in protein, health and active lifestyles, as well as the influence of wearable technology and GLP-1 medication usage, as structural drivers for the category. During the analyst question-and-answer session, Matt said THG’s approach to GLP-1 consumers is centered primarily on education rather than marketing a single product specifically for that audience.
THG also highlighted growth from licensing, adjacent categories and trade retail. Matt said licensing agreements commonly begin in one market, often the U.K. or U.S., before expanding to other territories if successful. He pointed to opportunities across convenience and coffee-shop channels, adding that the company’s partnership with Five Guys, which includes Myprotein products in shakes, was “just the start.”
Whey protein costs have increased about fivefold since 2021, THG said, creating pressure on consumers and industry margins. The company said it has responded with new products, licensing, category expansion and trade retail distribution. Despite further whey inflation in the first half, Nutrition delivered margin progression, according to management.
THG said it is now seeing signs of supply growth, market stabilization and potential price reductions for whey. If those trends continue, management said they could provide a meaningful tailwind into 2027 and support the division’s targeted EBITDA margin of more than 12%.
Beauty focuses on social commerce and AI
In Beauty, THG said it continued to gain market share in core territories. U.K. revenue growth at LOOKFANTASTIC and Cult Beauty was 6.7%, which management described as exceptional. The company added more than 50 brands across its websites in the first half, including prestige beauty brand Clarins.
THG said LOOKFANTASTIC is recognized as the number-one multi-brand beauty retailer on TikTok Shop for 2026. Management said its social-media presence supports direct sales, customer acquisition, brand awareness and traffic to its own websites.
The company also announced a partnership with Google involving three pilot programs over the next six months focused on how beauty products are discovered and purchased in an AI-led environment. Lucy Gorman, CEO of THG Beauty, said the company could not disclose further detail on the beta-stage partnership but said additional information would be available in coming months.
Gorman said THG recently introduced its Beauty Assistant, or Beauty Advisor, across both Beauty sites. More than 1% of customers are currently engaging with the tool, and those customers are seven times more likely to make a purchase, she said. The company is testing additional tools, including makeup try-on and skin diagnostics, for potential integration into the advisor.
Gorman also said up to half of customers now conduct significant product research through large language models before visiting a website. Traffic referred by such models has increased fourfold, although it remains a small share of total traffic, she said.
THG’s U.K. beauty manufacturing operation, described by the company as the country’s largest prestige beauty manufacturer, delivered a strong first half supported by new contract wins and cost discipline. In the U.S., packaging-component delays related to issues in the Strait of Hormuz constrained first-half dispatches. THG said the delayed orders remain in place and that it expects a strong fourth quarter for U.S. manufacturing as the backlog is shipped.
Outlook and balance sheet
For the third quarter, THG expects constant-currency sales growth of about 2%, with earnings and cash generation remaining robust. Trading across core brands and markets produced about 5% revenue growth in July and August, though this was partly offset by softness elsewhere, including the effect of EU duties and timing of own-brand sales.
The company expects revenue growth to accelerate to approximately 6% to 7% in the fourth quarter. It said September had started positively and expects to sell more than 250,000 advent calendars this year.
THG said HMRC now expects to provide an update by the end of October 2026 on the Nutrition division’s VAT claim, citing the volume of industry-wide claims involving more than 300 products across nearly 100 brands.
Looking further ahead, THG said EBITDA growth, improving cash flow and a potential conclusion to the VAT claim could reduce group net debt to approximately one times leverage by the end of 2027. Management added that a meaningful disposal of a non-core asset could move the group to a net cash-positive position by that time. Matt said the company has received bids for several assets but has rejected all offers to date because it did not consider them to reflect fair value.
About THG (LON:THG)
THG (www.thg.com) is a global innovator revolutionising how brands connect to a worldwide consumer base. We are transforming how consumer brands go to market in the digital age.
We have built a portfolio of leading digital beauty, health, wellness, and sports nutrition brands that are capitalising on the global growth opportunities, supported by the accelerating consumer shift to the e-commerce channel.
THG is home to three key divisions: Beauty, Nutrition, and Ingenuity. All brands, whether in-house or third parties are powered by our complete commerce division Ingenuity, which is a flexible and scalable offering formed of a combination of complex e-commerce technologies, physical assets, infrastructure, and brand building capabilities.
THG Beauty is home to leading online pure-play retailers for prestige beauty products and brings together global online multi-brand retail subscription boxes, owned prestige brands along with production and innovation.
