- Billi acquisition drives first-half revenue up 28 per cent to £65mn
- Operating profit down from £12.9mn to £11.8mn
- Interest costs quadruple to £5mn
- Adjusted pre-tax profit slumps 41 per cent to £6.8mn
- Net debt rises £31.8mn to £93.1mn
- Interim dividend cut from 2.75p to 0.9p
- Analysts cut 2023 and 2024 EPS estimates by 20 per cent
The directors of Isle of Man-based Strix (KETL:58p), a global leader in the manufacture and design of kettle safety controls and components for water heating and filtration products, highlighted green shoots of recovery at the annual results in March (‘Green shoots for this stock after 2022's perfect storm’, 29 March 2023). The narrative raised investors' expectations of a strong bounce back in this year’s profits. It has proved a false dawn.
Ongoing macroeconomic headwinds have resulted in lower demand for kettle controls in key export-regulated markets (60 per cent of divisional sales) and a slower overall recovery in trading than the directors had anticipated. Accounting for 45 per cent of both group revenue and profit, the category’s gross profit slumped from £15mn to £10.7mn on 17 per cent (£6mn) lower revenue of £28.8mn. The profit reversal was accentuated by a six percentage point contraction in margin. The directors expect the downward trend to continue in the short term, noting weakness in North America and Japan during July, although both the UK and Germany have delivered a recovery in the current quarter, having suffered weakness in the first half.