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 the following trading update for the year ended 31 December 2020.
The Group experienced a marked recovery in H2 as anticipated, and a strong order book has enabled it to deliver circa 2% growth in adjusted profit after tax for the full year versus the previous financial year (2019: £28.9m). Strong sales since June have been driven by replenishment of pipeline stock and a strong seasonal uplift.
This performance demonstrates the 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. Current strong order book visibility for Q1 underpins the Board’s continued confidence.
Kettle Safety Controls
The Kettle Safety Controls market has experienced a strong bounce back in the second half of 2020. Throughout this volatile period, Strix has managed to maintain its market leading position for kettle safety controls, continuing to grow the number of specifications using its latest platform ranges which demonstrates how successfully the Company has dealt with the challenges of the pandemic.
The much improved performance in the second half has continued into 2021. The Kettle Safety Controls category has a strong order book for January and Q1 giving management the confidence in delivering a stronger first half versus last year.
2020 was a successful year for Strix’s water filtration division with the acquisition of LAICA in October and the Aqua Optima brand delivering record sales for yet another year. Strix’s experienced management team is working hard to ensure the integration of LAICA is executed effectively to achieve the identified benefits and the trading performance has been strong over the period delivering double-digit revenue growth. The new, expanded, brand portfolio will be used for the planned geographical expansion in the second half of 2021 for consumer water. The Group expects many of the new product launches in 2020 to accelerate this year as the retailers introduce them to their in-store and online portfolios.
For professional water, Strix recently announced that the HaloPure technology was selected by Chia Tai Group, one of the most specialised, well-known livestock companies operating in China, and Strix will install its full system by the end of January 2021. HaloPure’s technology has become increasingly well recognised by the market and the evolution to offer farming solutions for clean drinking water is likely to result in significant further business opportunities for the Group in the future.
2021 will see many of the appliances created in 2020 penetrate the consumer markets across the world with the most notable being the Aurora (Instant Flow Heater/Chiller) in the first half, and Dual Flo and the expansion of the Baby Care technology range in the second half.
Strix will continue to work closely with its key brand partners and own brands to bring innovation to the markets delivering core benefits in usability and sustainability to the consumer.
The business remains highly cash generative, maintains a robust balance sheet and has a strong liquidity position. As at 31 December 2020, net debt was lower than previous guidance for this financial year, having successfully implemented a range of efficiency measures and strategic initiatives. This places Strix in a financially strong position and with a disciplined approach to investment, we will emerge from the pandemic well positioned for a market recovery.
Given the Group’s performance in 2020 and the Board’s confidence in the continued strength of its cash generation, the Board confirms its intention to pay a total dividend of 7.7p per share in respect of the 2020 financial year, inclusive of the 2.6p per share paid as an interim dividend.
Operational, New Product, Corporate Progress and Managements
The relocation of Strix’s existing manufacturing operations in China has continued to make excellent progress in line with the projected schedule, and the Group is pleased to report that the external construction is now complete and on budget and has recently received a successful construction completion audit by the local government. Strix will begin transferring some of the production lines after the Chinese New Year and remains on schedule to be fully operational by August 2021, as originally planned.
In addition to its investment in growth initiatives, the Board continues to invest in strengthening its management in line with its strategy and to explore 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 Filtration and Appliance categories.
Outlook and Notice of Preliminary Results
Despite the impact on the global economy, the Group is robust and, as a market leader with an unrivalled global footprint, remains confident in its future prospects. Following the successful implementation of efficiency measures and strategic initiatives, the Group is in a strong position to continue to invest in compelling growth opportunities and well placed to benefit from the acceleration in demand and emerge as a stronger business once COVID-19 passes.
The Group will be announcing its preliminary results for the year ended 31 December 2020 on 24 March 2021.
Mark Bartlett, Chief Executive Officer, said:
“Strix has successfully delivered modest growth in adjusted profit after tax for the full year which is testament to how well the Company has dealt with the challenges of the pandemic.
“Consistent with what was announced at the Capital Markets Day in November, the recent strong performance underpins our confidence of doubling Group revenues over the next five years. We remain focused on investing in compelling growth opportunities to support this medium-term ambition, as well as executing on ESG commitments which is core to our strategy to provide a safer sustainable future for our customers.”