Strix Group (LON:KETL), the AIM listed global leader in the design, manufacture and supply of kettle safety controls and other complementary water products used in temperature control, steam management and water filtration, has announced the following trading update for the year ended 31 December 2019.
Strix has delivered a solid performance across the Group during 2019 despite continuing global volatility driven by Brexit and USA/China trade tensions. The Board expects to report adjusted profit after tax in line with market expectations. As a result of strong cash generation and an improvement in cash outflows, the Group will report a better than expected net debt figure of c.£26.3 million.
Despite these geo-political events, the global kettle market has remained resilient and posted an estimated growth of 4.5% with a strong performance in Russia and Western Europe, offset by softening in the UK and South Africa.
Strix has maintained its share in the Regulated market which demonstrated marginal growth. The Less Regulated market weakened slightly with an estimated growth of 8% due to the decline in South Africa, where Strix preserved its strong share of a depressed market. Strix also maintained its share in the China market which exhibited flat growth in the traditional kettle segment due to the ongoing substitution of higher end kettles with healthy eating appliances where Strix gained significant share off the back of previous IP actions.
The Group’s water category has been further strengthened during 2019 following the acquisition of HaloSource in March which now incorporates the Aqua Optima, Astrea and HaloPure brands. The water category continues to explore new markets and collaborations with leading brands to further enhance its route to market. The Group expects to report growth of c.6% for the water category as it executes the expanded strategy which now includes the HaloSource products. In the face of sustained market pressure, the Group’s Aqua Optima brand has achieved a c.1.1% growth in net sales which out-performed the 0.7% value growth in the UK filter and jug market.
The Board remain committed to launching twelve new products across the appliance and water categories during 2020, this affirms the Group’s strategy for enhancing its core technologies to develop innovative and sustainable products. The Board also continues to seek strategically compelling acquisition opportunities, subject to strict financial criteria and consistent with its capital allocation priorities, to further enhance the Group’s growth potential within the water and appliance categories.
The Group has made significant progress during the second half of the year in relocating the manufacturing operations in China to Guangzhou’s Zengcheng district. The Group has signed a construction contract with Shanghai Installation Engineering Group Co. Ltd for RMB 128m and held a foundation stone laying ceremony in October which was attended by the Strix senior management team. The Board is pleased to re-confirm that the construction project is on schedule to meet the January 2021 completion date with costs in line with expectations.
Given the Group’s performance in 2019 and the Board’s confidence in the continued strength of its cash generation, the Board reconfirms its intention to pay total dividends of 7.7p per share in respect of the 2019 financial year, inclusive of the 2.6p per share paid as an interim dividend.
The Group will be announcing its results for the year ended 31 December 2019 on Wednesday 18 March 2020. An analyst briefing will be held on the day in the City of London. Analysts interested in attending should contact florence.chandler@investor-focus.co.uk or +44 (0)20 3934 6636.
Mark Bartlett, Chief Executive Officer, said:
“The Group has achieved another solid performance with adjusted profit after tax in line with market expectations. Strix remains committed to investing in the growth of our business and bringing new products to the market where we are on track to deliver 12 new products across the appliance and water categories during 2020.
“We continue to strengthen our long-term strategic position through the construction of a new factory in China. Strix improved its net debt position through sustained cash generation and revisions to the timing of cash outflows relating to the new factory. As a result, we look forward to the year ahead with confidence and have put in place the foundations to achieve our strategic objectives for 2020 and beyond.”
