Strix net debt widens as it combats price rises
By Josh White
Date: Thursday 27 Jan 2022
(Sharecast News) - Kettle safety and water technology company Strix reported positive second half momentum in a trading update on Thursday, having achieved 30% revenue growth on a constant-currency basis, and profit after tax in line with market expectations for 2021.
The AIM-traded firm said that the outcome for the year ended 31 December underpinned its confidence in delivering on its medium-term target to double revenue by the end of 2025, primarily through organic growth in its water and appliances categories.
It said it was "proactively managing" and mostly offsetting the impact of a number of persistent headwinds in its supply chain, freight cost inflation and adverse foreign exchange rates.
That was being achieved through price increases on some of its legacy products, implementing hedging strategies, as well as other efficiency measures and strategic initiatives.
Additionally, Strix said it had crystallised a tax benefit in relation to its factory opening which was expected to result in a lower effective tax rate in 2021.
The board said its "strong" trading performance demonstrated the continued resilience of the company's business model, benefitting from geographical and product diversification, strengthened further by the group's high cash generation and "prudent" balance sheet control.
Net debt pre-IFRS 16 lease liabilities at period end totalled £51m, which was higher than previous guidance as Strix said it had "proactively invested" to minimise the future impact of continued commodity price inflation.
"Strix remains in a strong financial position to continue to deploy capital consistent with its capital allocation priorities and invest in a compelling growth strategy which includes actively seeking opportunities that will add value across the group through niche acquisitions or technologies," the board said in its statement.
"Given the group's performance in 2021 and the board's confidence in the continued strength of its cash generation, the board confirms its intention to pay a total dividend in line with its progressive dividend policy that is linked to underlying earnings."
Strix said it would announce its preliminary results for the year ended 31 December on 30 March.
At 1508 GMT, shares in Strix Group were down 1.98% at 247p.
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