Stelrad Group Delivers Record Revenues

• Strategy continuing to deliver with outlook for the full year unchanged 

Stelrad Group plc, a leading specialist manufacturer and distributor of steel panel radiators in the UK, Europe and Turkey, today announces its unaudited interim results for the six months ended 30 June 2023. 

Results summary* 

*As a result of inflation in Turkey exceeding 100% over a three-year period, the Group was required to adopt IAS 29 in respect of its Turkish subsidiary in the financial statements for the six months ended 30 June 2022. On 1 January 2023, the functional currency of the Turkish business was changed from Turkish Lira to Euros and, as a result, IAS 29 is no longer being applied after this date.  

**Adjusted figures are stated before exceptional items, the impact of IAS 29 (until 31 December 2022), amortisation of customer relationships, foreign exchange differences (until 31 December 2022) and tax thereon where applicable.  See note 9 for a reconciliation of adjusted profit after tax.  See note 5 for a reconciliation of adjusted operating profit.  See the finance and business review for a reconciliation of free cash flow. 

Financial and operational highlights

• Record first half revenue of £157.0 million. The integration of DL Radiators’ activities enabled the Group to deliver 6.2% revenue growth, although like-for-like revenues were 12.7% lower than prior year, against very strong first half comparatives in 2022, combined with the impact of high inflation and rising interest rates, supressing both new construction and renovation activities:

• UK & Ireland: revenue (pre-IAS 29) -0.7% (-1.0% organic), adjusted operating profit -6.5%.
• Europe: revenue (pre-IAS 29) +20.3% (-22.1% organic), adjusted operating profit -34.7%.
• Turkey & International: revenue (pre-IAS 29) -23.5% (-29.8% organic), adjusted operating profit -65.0%.

• Group contribution per radiator (pre-IAS 29) increased by 10.0%, driven by dynamic pricing and cost management.
• Volume mix of higher margin, premium steel panel radiators up slightly during the period.
• Adjusted operating profit performance adversely impacted by the anticipated volume decline versus strong H1 22 comparative and increased depreciation charges, partially offset by pro-active margin management and cost reduction initiatives.
• Strong cash flow performance driven by proactive working capital management, despite seasonal high point.
• Leverage at 30 June 2023 was 1.76x (December 2022: 1.62x), based on net debt before lease liabilities. Cash balances of £20.6 million (December 2022: £22.6 million) and undrawn available facilities of £9.3 million (December 2022: £10.1 million) provides the Group with financial flexibility.
• Longer-term tailwinds of decarbonised, energy efficient heating systems continue to underpin Stelrad’s confidence in the future. Launch of new electric range in the UK in second half 2023.
• Recommended interim dividend of 2.92 pence per share (2022 interim dividend: 2.92p), to be paid on 27 October 2023, reflecting the Board’s confidence in the Group’s prospects and balance sheet.
• Outlook for FY23 adjusted operating profit unchanged. [1] 

Commenting on the Group’s performance, Trevor Harvey, Chief Executive Officer, said:

“Despite challenging macroeconomic conditions across a number of countries, Stelrad’s leading positions mean that the Group remains well placed to outperform the market and deliver on its full year expectations.  

“Our focus remains on our key objectives of growing market share, improving product mix, optimising routes to market and positioning effectively for decarbonisation.  Following a pivotal first year as a PLC in 2022, I am pleased that, despite the notable headwinds facing the wider industry, we have been able to deliver on our plans for the first half of 2023 and remain on course to achieve our expectations for the full year.  

“The resilience of our business model, alongside our experience of navigating previous market downturns, means that the Group is well positioned to capitalise once markets improve.  Regardless of the near term headwinds facing the wider sector, the increasing need for decarbonised, energy efficient heating systems remains unchanged and underpins our confidence in our ability to drive long-term shareholder value.”

Source : Stelrad Group plc

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