Strix Group plc (LON:KETL) Chief Executive Officer Mark Bartlett caught up with DirectorsTalk for an exclusive interview to discuss what the company does, 2024 being a rebate year, things to look forward to in the next 6-12 months, and why investors should be excited about the business.
Q1: Mark, could you just introduce Strix Group to us and just explain what it is that you do?
A1: Yes, Strix is probably best known as a leading supplier of thermostatic safety controls, primarily using kettles to protect consumers. I mean, in fact, Strix products are now estimated to be used 1.1 billion times per day in over 100 countries and by 10% of the world’s population.
We are a technology-led company based on the Isle of Man with around 300 active patents at any one time and work within the small domestic appliance and filtration markets, providing safe and sustainable solutions for drinking water from portable bottles, fridge jugs and kettles to more recently hot taps installed in both commercial and residential dwellings. We also provide filters to major brands for some of the coffee machines globally, as an example.
Q2: Now, you’ve said that 2024 was a rebate year. Could you tell us a bit more about that?
A2: The macroeconomics have been very tough over the last few years, and we have been impacted both in our consumer goods division as well as the controls division. In particular, a significant part of our business comes from both the UK and Germany, and we have seen quite a significant lack of discretionary spending in those regions for obvious reasons.
During the rebates and restructuring, we’ve already taken a forensic review of our balance sheet and eliminated projects or initiatives that are seen as a distraction to the business or have limited short-term profit impact.
We’ve spent some time really trying to strengthen our management team to focus on profitable growth opportunities within the consumer goods, and we’ve optimised our manufacturing facilities to improve our environmental footprint, but also to reduce costs.
Q3: So, what can we look forward to hearing from you over the next 6 to 12 months?
A3: Where do I start with this one? If I may, I’ll break it down into the divisions and be as succinct as I can.
So, the Canada divisions, first of all, that’s a very well-established part of the business, but we are still innovating. We’re still doing some very different things. We launched a new low-cost control in August of 2024, that’s really targeting the Chinese market and some of the unregulated markets. Next year, we’re bringing out what we call the next generation of controls. That’s a really exciting and innovative control, physically smaller, opens up new opportunities in different types of products.
We’re also working on a number of appliances, trying to bring out sustainable appliances that really are trying to change consumers’ behaviour to ensure they can reduce the energy usage or reduce the amount of water being used in an appliance.
In the consumer goods side, we’ve now moved into manufacturing appliances in our bespoke China factory, and that really does provide a clear opportunity for growth in that consumer goods division. We’ve won some very significant contracts in 2025 with retailers and are working on new products within the SDA markets, more domestic appliance market, to support double-digit revenue growth in 2025.
Finally, Billi, which is a more recent addition to the company, that is anticipated to have double-digit growth in Q4 of this year following the successful launch of new products in Australia, and they will roll out into the UK and Europe in 2025. We’re also expanding into Europe quite aggressively with an eye on the residential markets in the midterm, using Strix core technology to really try and provide a more sustainable and diversified product in that hot tap market.
Q4: Why should investors be excited about Strix Group?
A4: Against our peer groups, we are in the top quartile for the majority of the operational performance indicators, and yet the bottom quartile for valuation. So, clearly there’s a significant discrepancy between those two measures, and the business is currently undervalued in our opinion.
We are a company with significant barriers to entry for competition. We’re highly cash generative and profitable. We hold a dominant market share in the markets we serve, and we have some, as you’ve seen, some good positive growth opportunities, particularly within the Billi operation and the consumer goods division. We have worked very hard to rebase and restructure this business for mid-to long-term growth, and I believe we’re at an inflection point following that restructuring with many positive initiatives in progress to realise our future potential.
