Stelrad Profits Increase Despite Subdued Demand

• Continued strong performance through operational excellence, despite a challenging market backdrop 

Stelrad Group plc ("Stelrad" or "the Group" or "the Company", LSE: SRAD), a leading specialist manufacturer and distributor of steel panel and other designer radiators in the UK, Europe and Turkey, today announces its audited financial results for the year ended 31 December 2024.

(1) The Group uses some alternative performance measures to track and assess the underlying performance of the business. Alternative performance measures are defined in the glossary of terms and reconciled to the appropriate financial statements line item at the end of this announcement. 

Financial and operational highlights

• Operating profit for the year up 17.6% to £31.4 million, an increase of £4.7m (2023: £26.7 million), due to continued cost base optimisation initiatives, favourable materials pricing, strong product mix and the impact of exceptional items in 2023. Adjusted operating profit for the year up 7.6% to £31.5 million, an increase of £2.2 million (2023: £29.3 million).
  
  
• Contribution per radiator increased again, by 11.4% to £20.15, the first time the Group has achieved a figure in excess of £20, driven by margin control, an increased volume of higher output radiators in the UK market and an increase in overall premium panel sales mix to 5.7%.
  
  
• Revenue decline of 5.7% to £290.6 million as a result of ongoing challenges in RMI and new build markets, with high interest rates and inflation supressing activity.
  
  o  UK & Ireland: revenue down 1.5%, a creditable result despite wider market headwinds.
  
  o  Europe: revenue down 6.8% due to Euro devaluation and continued sales volume declines.
  
  o  Turkey & International: revenue down 27.7% to £14.2 million, driven by significantly lower sales volumes.
  
  
• Return on capital employed grew by 1.6 ppts to 27.1% boosted by strong operating profit.
  
  
• On Time In Full (OTIF) delivery of 98% (2023: 97%) in the UK & Ireland, reflecting the group's market-leading customer service and product availability.
  
  
• Investment in working capital to enhance service levels meant that free cash flow decreased by £8.2 million to £9.6 million (2023: £17.8 million).
  
  
• Leverage at 31 December 2024 was 1.37x (2023: 1.47x), based on net debt before lease liabilities.
  
  
• Recommended final dividend up 2% to 4.81 pence per share (2024 final dividend: 4.72 pence per share), to be paid on 27 May 2025, reflecting the Board's confidence in the Group's prospects and balance sheet.

Current trading and outlook

• Although both RMI and new build markets continued to experience subdued levels of demand during 2024, the robust performance delivered by the Group in the twelve months to 31 December 2024 has continued into 2025, with trading since the period end remaining in line with management's expectations.
  
  
• Although Stelrad continues to expect softness in market conditions for the first half of 2025 at least, the Group is seeing a recovery in its volumes in some of Stelrad's core European territories such as Belgium, the Netherlands and Poland, where volume gains have been driven by our sustainable competitive advantages.
  
  
• The Group continues to believe that management's considerable experience of successfully steering the business through other challenging market cycles will enable the business to navigate the ongoing market challenges and deliver another year of progress.
  
  
• As outlined at our recent Capital Markets Event, a significant installed radiator base and long-term structural growth drivers of premiumisation and decarbonisation underpin the Group's confidence in its future. With these attractive market opportunities and the Group's market leadership, flexible lowest-cost manufacturing and leading levels of customer service, Stelrad enters 2025 in a strong position.

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

"2024 largely saw a continuation of the challenging conditions that have characterised the wider marketplace in recent years.  However, as a result of our rigorous focus on operational excellence, the flexibility of our business model and the strength of our market position, we have still delivered a strong financial performance across the business, despite ongoing declines in revenues and volume. 

"Our focus on proactive margin management initiatives has resulted in our contribution per radiator exceeding £20 for the first time, while an increase in the penetration of premium panel products into the UK & Ireland underpins our confidence in the role that premiumisation will continue to play in driving long term growth. 

"We also continue to position our business effectively for decarbonisation, promoting high output conventional radiators, developing hybrid products for low temperature systems and introducing electric ranges into our core markets." 

"While we are not expecting the wider market backdrop to improve significantly during the first half of 2025, we are encouraged by our continued volume recovery in some of the Group's core European territories and remain confident that, regardless of wider macro conditions, Stelrad is able to outperform its peers and deliver continued growth for our stakeholders."

Source : Stelrad Group plc

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