Strix Group achieves positive first half with revenue growth of more than 57% (LON:KETL)

Strix Group

Strix Group plc (LON:KETL) Chief Executive Officer Mark Bartlett caught up with DirectorsTalk for an exclusive interview to discuss strong growth in the first half, new manufacturing operations in China, the performance of the LAICA acquisition, their new sustainability strategy, doubling revenues in 5 years and what to expect from the group for the rest of this year and into 2022.

Strix Group is a global leading in the design, manufacturer and supply of kettle safety controls and other components and devices involving water heating and temperature control, steam management and water filtration. Today, the company provided interim results for the six months ended 30th June 2021 and joining me to discuss the results is CEO Mark Bartlett.

Q1: First off congratulations on another period of strong growth, can you just take us through the highlights of the first half?

A1: It’s been a very positive first half with revenue growth of more than 57% against the COVID-affected prior year and just as pleasing is the strong performance against 2019, up nearly 25%.

There’s a number of really positive initiatives and I’ll just touch on a few if I may:

First of all, we’ve completed our new factory in China which provides an 80% increase in capacity, we are really proud of our team out in China who have completed this on time and to budget, all throughout a pandemic so I think a great achievement.

We’ve also seen a further increase in our global market share of the kettle controls, that is really thanks to all of those people out there working from home and they’ve all gone out and bought new kettles so that’s been great for us.

We’ve launched a new sustainable innovative and dependable strategy which really is setting out our ambitious commitments for our sustainability strategy.

We’ve continued to expand our compliance with international standard, once again achieving the highest award which is the Benchmark Status for our core operating sites.

We have worked really hard on the integration of our most recent acquisition, LAICA, which is already providing very significant benefits to our water and appliance categories with a growth of more than 20% for the first year.

So, it’s been a great first half.

Q2: You mentioned your new manufacturing operations in Guangzhou in China, they’re now fully operational, what efficiencies will this bring to the business?

A2: The previously factory we leased was completely full so we had absolutely no room for expansion. The new factory is providing an array of opportunities to insource some of the key water filtration products and, as I said before, it gives us an 80% increase in capacity which will support our future growth plans.

It also allows us to further increase the automation and efficiency of our factory, we now have 73% of our production lines fully automated, providing improvements in margin but also protecting us against the constant increase in wage costs.

A3: Again, LAICA is performing really well and we are making excellent progress on the integration of that business.

During the first half of the year, we saw a growth of more than 20% despite all of the disruptions from the pandemic so a very good start. The acquisition itself brings an exciting roadmap of new products as well as a really comprehensive portfolio of established products to really support our long term initiatives.

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It also gives us a state of the art facility in Europe, providing us a base to manufacturer and sell to Europe from Europe which doers actually remove many of the issues we faced around Brexit in the first half of the year.

Q4: You mentioned your new strategy ‘Sustainable, Innovative and Dependable’, what does this mean for the company?

A4: This actually represents quite an important milestone for the group with the launch of this strategy. In the next few years, we’ll see significant planning and project execution as we really look to advance our KPI’s, this is a crucial aspect of our mission to innovate safety and design for a sustainable future.

The strategy document has now been posted on our website as we have committed and we have come to this with our normal ambitious targets and a commitment to achieve net zero for Scope 1 and 2 emissions by the end of 2023, which is significantly ahead of the Paris Agreement.

In addition, we’ve also launched our diversity strategy which you can also find on the website as of today which really demonstrates how we create a working environment that empowers employees to really thrive to their full potential.

Q5: You’ve committed to doubling revenues in 5 years, what gives you the confidence in achieving this?

A5: There are a number of factors that give us confidence on this commitment.

First of all, our performance in the first half really does demonstrate the strength and resilience of our business. In addition to strong growth in our core business, we have seen growth in our water and appliance categories of 98% and 876% respectively due to both the acquisition of LAICA but also to some of those new products really starting to gain some traction.

We spent some time investing in our people during the pandemic and in skill sets to ensure that we really do have the right people in the right places and to provide the environment and culture that really allows them to thrive to their full potential. I really do believe that we have an exceptional team here.

We have a very strong and exciting roadmap of new products that will support the organic growth for that period and we’re also an extremely cash generative business and have a unique working capital cycle that will allow us to continue to invest in any compelling growth opportunities to the future.

We remain very confident at achieving our commitments, to doubling this business in a 5-year period, as we communicated back in our Capital Market’s Day presentation.

Q6: Finally, can you just summarise what we can expect from Strix Group in the rest of the year and into 2022?

A6: I think the simplest way is to say, ‘more of the same’.

We are generating and will continue to generate a culture of continuous improvement and that in itself will bring us new innovative products, you’ll see a whole range of products coming out over the next 12-18 months. A very strong focus on our sustainability goals, continued improvements in our efficiencies and insourcing with that new factory now fully up and running and you’ll see further investment in compelling growth opportunities as they come about and, as always, securing our growth commitment in line with the market expectations.

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