Ukraine invasion blamed for Strix first-half performance

21st Sep 2022 16:03

(Sharecast News) - Strix Group reported revenue of £50.7m for its first half on Wednesday, down 7.3% year-on-year but up 15.5% compared to the pre-Covid comparator in 2019.

The AIM-traded kettle safety and water filtration technology company said revenues in the six months ended 30 June were adversely impacted by Russia's invasion of Ukraine on "peripheral" geographies.

Its adjusted gross profit margin rose to 38.5% from 37.5%, driven by what the board described as its ability to manage costs, and to "flex" variable overheads in line with its sales performance.

Adjusted profit after tax slipped 5.6% to £11.6m from £12.3m, although that was still 6.4% higher than the same period in 2019.

Strix said its net debt expanded to £61.3m from £51.2m a year ago, as a result of further drawdowns to fund net working capital, capital expenditure and employment earn-out payments.

That made for a net debt-to-adjusted EBITDA ratio, calculated on a trailing 12-month basis, of 1.6x.

It said it had "significant" liquidity, providing financial flexibility to continue to deploy capital consistent with its allocation priorities, adding that it was focussed on investing in "compelling" growth opportunities.

Adjusted basic and adjusted diluted earnings per share for the first half fell to a respective 5.6p and 5.5p, from 6p and 5.9p year-on-year.

The board maintained an interim dividend of 2.75p per share.

"Despite the challenging macroeconomic and geopolitical environment, Strix has delivered a robust performance across its three product categories and remains on track to deliver medium-term targets to double the group's revenues primarily through growth in its water and appliances categories," said chief executive officer Mark Bartlett.

"The macro headwinds have resulted in a reduction in demand in the kettle control category in the key export markets but offsetting this has been a recent improvement in trading conditions within China which has already started to come through."

Bartlett said that in the appliances category, there had been some "promising signs" of consumer market penetration of product ranges and in the water category, new distribution and private label contracts were secured with "reputable" distributors, retailers and brands.

"The group remains in a strong financial position and given the strength of its cash generation, the board declares an interim dividend that is in line with last year."

At 1544 BST, shares in Strix Group were down 16.53% at 118.2p.

Reporting by Josh White at Sharecast.com.