Strix Group Plc (LON:KETL) Chief Executive Officer Mark Bartlett caught up with DirectorsTalk to discuss 2024 performance, impact of US tariffs, and plans for product innovation and market expansion.
Q1: Mark, can you just talk us through the main highlights of the year?
A1: We’ve delivered adjusted profit before tax of £18.7 million, which was ahead of the market consensus and quite comfortably within our previous in that range of £18-£19 million.
During the year, we’ve had some quite comprehensive restructuring and rebasing activities and that really has set secure and strong foundations to drive the medium-term profitable growth. Management has maintained its focus on the net debt reduction through the year and on cash generation. We are reporting a £20 million reduction in the net debt position during the year, which takes us to £63.7 million, with our net debt leverage now reduced to 1.87 times, well within Strix Group’s announced target range of one to two times.
Following a successful new product launch, Billi returned to double digit growth in Q4 of 2024 and now contributes just over 30% of the group revenue and that growth is set to continue going into 2025.
We also saw some strong rationalisation of the Consumer Goods division with a focus on more profitable products, geographic expansion and new product development and we are now finally manufacturing appliances for a key baby brand in our China factory as well.
The group has continued to leverage its market leading position in kettle controls, particularly in the less regulated markets, with the launch of a new low-cost control as well.
Q2: Now, the recent US trade policy is obviously a key focus right now. Can you talk us through the impact of the US tariffs and how the group’s been managing that impact?
A2: Whilst it’s too early to determine the net global impact of tariffs on Strix Group, direct sales exposure into the USA is quite limited. Controlled sales around £7 million into the USA, then no material sales from the Consumer Goods division and none at all from Billi.
Although there has clearly been some impact with OEMs and some pausing or redirecting shipments to America and some reducing their working wheat in the short term, conversations at the recent Canton Fair really showed OEMs to be relatively calm with a wait and see attitude and a common belief that resolution will be found within the next few months.
There is likely to be a little bit of an increased price pressure in the European market as OEMs impacted with lost sales in the US redirect strategies. But we are well cushioned, to an extent at least, by our market lead position in controls. Our focus on innovative technology will certainly support the brands and OEMs growth plans and strong momentum from Billi generating additional revenue streams.
Q3: You mentioned the Spring Canton Fair. I know it’s important trade show for you, what were some of the key takeaways from your time there?
A3: It was a really interesting show and very positive for the group.
As you can imagine, there was a considerable focus on the potential impact of those US tariffs, and clearly that’s had a disruptive impact on some of the OEMs.
However, contrary to some of the reports, the general feeling was, as I say, that wait and see attitude and that difficulties posed here would ultimately be short term. Many of the OEMs have already foreseen such issues and have already set up factories in alternative territories, and many of the OEMs actually saw this as a midterm opportunity. Certainly, there was not the panic reported by some of the media.
There was also plenty of activity for us during the show. We actually had more than 3,000 models of kettles on display and the group is visibly holding its market share. We had very, very positive and constructive discussions with brands and retailers from across the world.
The show was well attended by OEMs and brands alike, and we were particularly pleased to see a very strong pull for the revolutionary next generation of control and some of the new technology offerings that we were showing. The key focus really was on innovation as a means of differentiating their own products for the future growth.
Q4: Now, this year you’ve made a lot of key investments across the business. Can you talk a little bit more about those investments? What’s the rationale behind them and how you’ve been balancing that with your continued focus on managing the debt position?
A4: Reducing the debt position has remained a key priority during the year and we continue to be focused on maintaining leverage well within a conservative forward range. However, we also do recognise the importance of ensuring appropriate strategic investment is made right across the group to protect new product development and any other projects that support our longer-term growth aspirations.
Some of those investments across the divisions include the low-cost control that was launched in the second half of ‘24 and the revolutionary new generation of innovative controls that will be launched middle of this year.
In the Consumer Goods, we’ve invested in targeting geographical expansion and really trying to grow the brand awareness across key territories and in Billi, there’s been a very strong focus on investment into geographical expansion and new product development to increase our addressable target market. In addition, we have secured a new facility with a high capacity in Australia where it can further ramp up its production. We’re clearly demonstrating our commitment to invest in the division’s future growth.
Q5: What should investors be excited about over the next 12 months? Are we expecting the return of the dividend now?
A5: Strix Group really have spent time in ‘24 building strong foundations for profitable growth with some really quite exciting prospects ahead.
In the Controls division, the initial sales of the low-cost control have been positive and certainly have expanded our addressable market, and the next generation of controls has also been really well received with customers in their initial testing. It’s on track to be formally launched at the end of this first half of the year. We had a lot of success with new industrial designs that we provided at the Canton Fair, and also of particular interest to you, we’ve seen a number of projects being signed up with plenty more to follow.
Billi’s double-digit growth has continued into the first part of this year as it gains further traction with customers across its key target markets in Australia, Asia, and Europe. We’ve got scheduled product launches in the UK and Europe, supported by some very strong customer pull.
Consumer Goods has seen its retail contracts continue to roll out and manufacturing of appliances on behalf of its partnership with a leading global baby brand have ramped up in our China facility, which is obviously very positive. Following the division’s restructure, it is now really in a very strong position to execute on the sale of more profitable products, gain geographical expansion and introduce new product innovation.
With respect to the dividend point you made and given the backdrop where clearly macroeconomic and geopolitical conditions remain quite challenging, the Board has decided to reinstate the full year ‘24 final dividend of 1.28 pence per share. Payment will take place in December 2025, alongside the interim dividend, given our strong cash generation in Q4. A resolution to seek approval for that final dividend payment will be sought in a general meeting to be scheduled in Q4 of this year.
