Strix Group plc (LON:KETL) FY21 results released this morning show a strong Group revenue performance of 25.3% growth yoy to £119.4m (FY20: £95.3m). On a constant currency basis revenue increased 28.8%, in line with the 30% guidance provided at the start of the year. All divisions were ahead of FY20 and, importantly for profitability, Kettle Controls recovered to pre-pandemic levels. The LAICA acquisition added £22.7m of revenue with organic growth of £5.5m equating to a 6.0% increase against the pandemic-impacted performance in the previous year. Excluding LAICA, Group revenue was in line with that achieved in FY19. Gross profit was 20.3% ahead yoy at £47.4m (FY20: £39.4m) despite gross margin declining 160bps as headwinds of commodity price inflation, adverse foreign currency movements and an increase in headcount impacted. Strix offset the full impact through price increases in the kettle division, continued operational improvements, growth in the kettle division and a good performance from LAICA. The rating of 15.2x FY22 earnings does not reflect the ambitious growth aspirations of the business. The dividend of 8.35p is expected to grow in line with earnings, equating to a yield of c. 3.7%. Underlying operating profit and PBT forecasts are unchanged on today’s statement. Underlying operating profit and PBT forecasts are unchanged on today’s statement. Underlying operating profit and PBT forecasts are unchanged on today’s statement.
Material operational progress made in the year
¨ The acquisition of LAICA in October 2020 has been a game changer in terms of diversifying the business. The scale it has brought to the Appliance and Water divisions can be seen in the improvement in the margin dynamics of both.
¨ Reiteration of the medium-term growth target of doubling revenue by FY25 is testament to the resilience of the business and the confidence management has in the medium-term outlook. Current forecast projections suggest the FY25 gross profit target of c. £67.0m is well within in reach.
¨ Kettle control revenue increased 6.6% to £85.1m and is in line with the £85.8m achieved in FY19. Gross margin has been impacted by cost input pressures but at 41.9% remains healthy and with further price increases on legacy products should recover lost ground.
¨ The Appliance division saw a material change with revenue increasing to £12.9m on the back of the LAICA acquisition and product launches in the latter part of the year that have gone well. Gross margin of 37.7% is a strong performance.
¨ The Water division doubled revenue to £21.4m and materially improved gross margin (FY21: 32.3% Vs FY20: 20.5%) due to the contribution of LAICA. With new retail sites signed in the UK and Ireland further progress should be expected in FY22.
¨ Strix Group shares have been de-rated in line with the sector over the last six months. The current year rating of 15.2x is not challenging, particularly against the ambitious growth plans the management team have. The yield of 3.7% is an additional attraction.
Summary financials
| Price | 240p |
| Market Cap | £496.0m |
| Shares in issue | 206.7m |
| 12m Trading Range | 210.5p–390 p |
| Free float | 100% |
| Next Event | AGM – 26 May |
Financial forecasts
| Yr end Dec (£’m) | 2021A | 2022E | 2023E | 2024E |
| Revenue | 119.4 | 132.1 | 144.9 | 160.3 |
| yoy growth (%) | 25.3 | 10.7 | 9.7 | 10.6 |
| EBITDA | 40.6 | 41.6 | 44.2 | 47.3 |
| EBIT | 33.7 | 35.4 | 38 | 41.1 |
| Adj. PBT | 32.2 | 34.2 | 36.7 | 39.9 |
| Adj. PAT | 31.4 | 33 | 34.1 | 37 |
| EPS (p) basic adj. | 15.2 | 16 | 16.5 | 17.9 |
| EPS (p) ful dil. Adj. | 14.9 | 15.7 | 16.3 | 17.6 |
