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 today announced the following trading update for the six month period ended 30 June 2019.
The Group has delivered a solid performance for the period and the Board confirms that it expects to report results in line with market expectations for the financial year. The Group expects to report growth in Adjusted Profit after Tax and a good net debt position given the cash committed to the new manufacturing facility, the acquisition in March 2019 and the increased dividend to shareholders.
Kettle Safety Controls
The market volatility experienced through 2018 as a consequence of geo-political events has intensified in 2019, including Brexit and USA/China trade tensions. The Group has not experienced any material impact as a result of USA/China tariffs as the flow of goods is principally between the Isle of Man and China. Despite these headwinds, the global kettle safety controls market posted growth of c.2% with stronger growth in the United States and the Far East offsetting weaker performance in China and the CIS.
Strix has maintained its global market leading share of the kettle controls market, achieving a stable market share in the Regulated and Less Regulated markets, together with modest share growth in China as a result of actions taken during H2 2018 and H1 2019.
Aqua Optima branded products have achieved a stable share in its key United Kingdom market despite challenging market conditions, which have driven an overall market decline of c.7% as a result of consumer confidence issues due to Brexit and price rises. Aqua Optima remains well placed to capture future growth when market sentiment improves as a result of its share of the tradebrand segment.
Performance of the assets acquired from HaloSource in the period since March 2019 has been in line with the Group’s expectations. The Astrea product (which is now part of Strix) has received significant interest from a number of parties with discussions ongoing with a leading global brand and a leading North American home shopping network. Strix continues to seek further opportunities to enter into agreements which management believe will drive future profitability.
Operational and New Product Progress
The appointment of an experienced Chief Commercial Officer in the period has further increased the focus on the commercialisation of new products, together with the execution of a ‘category management’ approach to drive sustainable future growth. The Group continues to actively work with selected partners in the ‘Small Domestic Appliance’ and ‘Baby Product’ markets to launch a number of innovative new appliances during 2020.
The project to relocate Strix’s existing manufacturing operations in China has advanced in line with the project schedule and the Group is pleased to report that a land usage agreement was signed during the period. This agreement grants the right to use the land for fifty years, a significantly longer period than originally expected, which provides security and stability for the site for the duration of its operational life. Design work is underway, with construction expected to start during H2 2019 and the project is expected to complete in Q1 2021.
Outlook and Notice of Interim Results
The Group has delivered a solid performance for the period and the Board confirms that it expects to report results in line with market expectations for the financial year. Given the Group’s performance in H1 2019 and the Board’s confidence in the continued strength of its cash generation, the Board re-confirms its intention to pay total dividends of 7.7p per share in respect of the 2019 financial year, an increase of 10% on the previous year.
The Group will be announcing its interim results for the six month period ended 30 June 2019 on Wednesday 18 September 2019. An analyst briefing will be held on the day in the City of London. Analysts interested in attending should contact firstname.lastname@example.org or +44 (0)20 3934 6630.
Mark Bartlett, Strix Group Chief Executive Officer, said:
“Strix has achieved another solid performance despite continued challenges presented by the macro-economic conditions in which the Group operates. In particular, maintenance of the Group’s market share in the Regulated and Less Regulated markets, combined with modest growth in China, demonstrates the strength of our core business model.
We have maintained our margins due to our continued focus on operational enhancements and cost improvements of our core products whilst remaining on track with key projects, including the construction of the new facility in China and the integration of the assets acquired in March. The appointment of Harry Kyriacou as Chief Commercial Officer on 1 April 2019 has also enabled us to increase our focus on the commercialisation of innovative new product ideas.
As a Board, we have committed to increase the full year dividend by 10% to 7.7p per share, an indication of our confidence in achieving the Group’s business objectives for 2019.”