Strix Group Plc (LON:KETL), the global leader in the design, manufacture and supply of kettle safety controls and other complementary water temperature management components, has announced a pre-close trading update for the six month period ended 31 December 2021.
Trading Update
Strix has experienced continued positive momentum in H2 2021 and the Group has achieved circa 30% revenue growth on a constant currency basis and profit after tax in line with market expectations for 2021*. This outcome underpins management’s confidence in delivering on the medium-term target to double the Group’s revenue by the end of 2025, primarily through organic growth in its Water and Appliances categories.
Strix continues to proactively manage and mostly offset the impact of a number of headwinds which continue to persist including supply chain, freight cost inflation and adverse foreign exchange rates. This is being achieved effectively through price increases on some of its legacy products, implementing hedging strategies as well as a range of other efficiency measures and strategic initiatives. Additionally, the Company crystallised a tax benefit in relation to the factory opening which is expected to result in a lower effective tax rate in 2021.
This strong trading performance demonstrates the continued resilience of Strix’s business model, which benefits from geographical and product diversification and is strengthened further by the Group’s high cash generation and prudent control of its balance sheet.
Kettle Safety Controls, Water and Appliance Categories
The Kettle Safety Controls category has continued to experience positive volume growth as it continues to increase the number of specifications using its latest platform ranges and regions.
With the combined contribution of LAICA and HaloPure technology, the Water category has made solid progress with its growth aspirations. The trading performance of LAICA has been particularly strong as the acquisition continues to be successfully integrated in line with plan to achieve the identified benefits. The HaloPure technology also continues to gain wider recognition by the market and has now secured 14 contracts, which demonstrates the continued focus on commercialising this important product.
Within the Appliance category, Aurora (Instant Flow Heater/Chiller) is now starting to show signs of penetrating consumer markets across the world and is performing ahead of budget. Strix also continues to work closely with its key partners and own brands to bring technological innovation to the markets delivering core benefits in usability and sustainability to the consumer. The launch of the Induction kettle in December 2021 was an example of that which also won a highly prestigious German award for excellent product design.
Corporate and Operational Review
The new manufacturing operations within Zengcheng district in Guangzhou, China are now fully operational. The factory has doubled the Group’s manufacturing capacity enabling it to grow the business, increase efficiencies and implement further in-sourcing opportunities which are expected to have a positive effect on margins over the medium-term.
Strix successfully launched its sustainability strategy in September 2021. The Group remains on track to achieve its ambitious target for net zero Scope 1&2 emissions by 2023 and has also secured the ISO50001 accreditation of the new Chinese facility.
The arrival of a new Chief Technology Officer has brought significant expertise and, in a short space of time, is already having a positive impact in supporting Strix’s new product development initiatives which are an important part of the Group’s medium-term growth ambition.
Financial Position
Net debt (excluding the impact of IFRS 16 lease liabilities) as at 31 December 2021 was £51m which is higher than previous guidance as Strix has proactively invested to minimise the future impact of continued commodity price inflation.
Strix Group remains in a strong financial position to continue to deploy capital consistent with its capital allocation priorities and invest in a compelling growth strategy which includes actively seeking opportunities that will add value across the Group through niche acquisitions or technologies.
Given the Group’s performance in 2021 and the Board’s confidence in the continued strength of its cash generation, the Board confirms its intention to pay a total dividend in line with its progressive dividend policy that is linked to underlying earnings.
Notice of Results
The Group will be announcing its preliminary results for the year ended 31 December 2021 on Wednesday 30 March 2022.
*Consensus profit after tax for year ended 31 December 2021 is £31.4m according to FactSet.
