LONDON (ShareCast) - (Sharecast News) - Kettle control and water filtration technology specialist Strix Group reported adjusted revenue of £67.2m for its first half on Wednesday, marking a 3.5% increase at constant exchange rates, though it warned of a weaker third-quarter performance.
The AIM-traded firm said that growth was driven by a strong performance in its kettle controls division, and a positive shift towards higher-margin sales in regulated and less regulated markets.

Adjusted gross margins improved to 40%, up 320 basis points from the same period last year, maintaining 2023 levels despite seasonally lower trading.

Its adjusted profit before tax rose 15.9% to £8m at constant exchange rates.

Net debt decreased significantly to £68.8m, from £83.7m at the end of 2023, reducing the net debt leverage to just under 2x - well ahead of the company's year-end target.

Following a successful equity placing that generated gross proceeds of £8.7m, leverage further decreased to 1.76x.

The company said it had undertaken several restructuring initiatives to strengthen its core business and support medium-term opportunities for profitable growth.

They included the planned disposal of its Halopure division, expected to be completed by the end of the financial year, and the streamlining of its consumer goods division to drive ongoing profitability.

Strix had also partially relocated manufacturing activities from its Ramsey factory to its facility in China to improve shipping times, reduce costs, and lessen its environmental footprint.

The integration of Billi, a recent acquisition, had been successfully completed.

Despite slight delays in launching new products, Billi had secured initial distribution agreements in Europe and was expected to report high single-digit growth for the full year.

Strix had also started capital investment in new next-generation kettle controls, with revenue streams from the initiative anticipated in the second half of 2025.

Looking ahead, Strix said it expected continued progress in rebasing its business and was optimistic about achieving a net debt leverage target of 1.5x ahead of the end of the 2025 financial year.

While it experienced relatively lower trading in parts of the third quarter, it said it anticipated gaining further clarity on sales trends in the kettle controls market as it entered its peak season, bolstered by upcoming product launches.

Despite challenges from currency headwinds and commodity prices, Strix said it was implementing strategies to mitigate the obstacles where possible.

The company's strengthened balance sheet would allow for continued investment in technology and innovation, positioning it well for future growth.

Its board confirmed that, notwithstanding macroeconomic uncertainties, Strix was on track to report results for the full 2024 financial year in line with market expectations.

"Strix has made considerable progress on a number of fronts in the first half of the year, namely the continued rebasing of the business and the reduction of our debt position which I'm very pleased to report is ahead of our target," said chief executive officer Mark Bartlett.

"Operational improvements have been made across the group, better positioning us for medium and long term growth opportunities including new product launches, rationalisation of the consumer goods division and the roll out of Billi in key markets."

Bartlett said the company continued to see profitable growth opportunities in all of its core markets, and looked forward to executing on its strategy in the second half of the year, further improving its competitive position, strengthening the balance sheet and delivering profit growth.

"Notwithstanding the macro uncertainties, including the relatively lower trading for parts of the third quarter in regulated kettle controls, the board expects to deliver full year results for the year in line with market expectations."

At 1037 BST, shares in Strix Group were down 5.26% at 79.2p.

Reporting by Josh White for Sharecast.com.

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