11/06/2021R&D engine driving Breville's success - Eureka Report1/15Beat the price rise EOFY special o±er - Find out moreByAlan Kohler·14 Feb 2020R&D engine driving Breville's successAlan Kohler speaks with Jim Clayton, the CEO of Breville Groupabout what is behind the company's impressive half-yearly resultsand what impact the coronavirus is having on the business.Jim Clayton is the CEO of Breville Group, the maker of small kitchenappliances. It’s an Australian company; Australian engineering and design andthey sell these things all over the world, including more recently in Europeover the last couple of years. They're well established in North America, and ofcourse, Australia.A very interesting interview, which went longer than normal because it was sointeresting.I won’t try to preview it too much. I think it’s worth having a look at – listeningto, or reading. Towards the end, he’s very clear on the situation withcoronavirus in China because obviously they get their products made in Chinaand his comments on that subject are also worth waiting for.Here’s Jim Clayton, the CEO of Breville Group.Table of contents:Company history Eureka ReportJim Clayton - Breville Group00:00 / 36:53
11/06/2021R&D engine driving Breville's success - Eureka Report2/15Share price R&D Global market CoronavirusJim, before we get onto today’s half-yearly results, I wonder if you could justexplain to us how your business works? Because I gather you design smallappliances, co±ee machines, blenders and so on, get them made in Chinaand then market them under a variety of brands in North America, Europe,Australia and New Zealand and you make a gross margin of about 15 percent, a net margin after tax of just under 10 per cent. Does that kind ofroughly sum it up?The EBIT margin, not gross margin.EBIT margin, yeah, okay.Yeah sorry. If my gross margin was 15 per cent we wouldn’t be talking rightnow, that would not be good! The basic set up is we have a relatively largeteam from Australian standards in Australia that designs and engineers ourproducts. Those products are manufactured in China and then we sell them inroughly 65 countries, I think. We either sell them ourselves or through partners.The countries that you listed are countries where we have boots on the ground;we’re executing the o±ence and then the other countries, whether it be thePhilippines, South Africa, Brazil, whatever, we have a distribution partner ofsome sort in that country that’s selling our products to customers there.Right. I gather the company has been in the US for quite a long time,basically making an acquisition in 1997, but that wasn’t in the same productsthat are in there now. Can you just give us a bit of history? Breville started in1932 with a couple of guys called O’Brien and Norville.Right.