Strix ends year 'significantly ahead' of Covid-19 planning expectations

Kettle control and water filtration technology company Strix reported a 1.6% decline in revenue in 2020 on Wednesday, to £95.3m, which it said was “significantly ahead” of its Covid-19 scenario planning expectations, with a “marked recovery” in the second half.

The AIM-traded firm said its gross profit margin further increased to 41.4% for the year ended 31 December, from 40.9% in 2019.

Adjusted EBITDA increased 3.2% to £38.1m, which the company put down to a combined impact of its product mix, a range of efficiency measures including continued automation, and strategic initiatives.

The group said it had “significant” liquidity, providing financial flexibility.

Net debt, excluding IFRS 16 lease liabilities, widened to £37.2m from £26.3m over the year, as the firm funded the acquisition of Laica, and invested in growth opportunities as well as the new manufacturing operations in China.

The net debt figure represented a net debt-to-adjusted EBITDA ratio of 1.0x.

Basic earnings per share fell to 14.9p from 15.2p, while reported earnings per share improved to 12.2p from 11.3p in the prior year.

Strix said that, given the company’s “resilient performance” in 2020 and the board’s confidence in its ongoing cash generation, it was proposing to increase the total dividend to 7.85p per share for 2020, including the 2.6p paid per share as an interim dividend.

The directors said such a move would be in line with its progressive dividend policy, linked to underlying earnings.

“We are particularly proud of the way in which the company has responded to the pandemic and as a result the group has produced revenue that is significantly ahead of our Covid-19 scenario planning expectations, with a marked recovery in the second half,” said chief executive officer Mark Bartlett.

“In addition, the combined impact of product mix and a range of efficiency measures, including continued automation and strategic initiatives, has enabled the group to report an increase in both gross profit margin and the absolute level of EBITDA generated.

“The board has recently outlined its strategy of doubling revenues in the next five years.”

Bartlett said that despite recent events, the directors were maintaining their confidence in achieving that medium-term target, primarily through organic growth in the water and appliance categories, while continuing to grow its market share in kettle controls.

“We are also delighted with the addition of the Laica team following the successful acquisition in October, which will serve to expand Strix's water category and enhance its presence in the health and wellness segment of the appliance category, both of which are growth markets and enhance Strix's sustainability strategy.

“The much improved performance in the second half has continued into 2021,” Bartlett said, adding that the kettle controls category had a strong order book for the second quarter, giving management confidence in delivering a “significantly stronger” first half compared to last year.

In the water category, he said Strix expected sales of the new products launched in 2020 to accelerate in 2021, as retailers introduced them to their in-store and online portfolios.

“2021 will also 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 and chiller in the first half, and Dual Flo and the expansion of the baby care technology range in the second half.”

At 1007 GMT, shares in Strix Group were up 5.27% at 273.7p.