Strix shares slide on revised profit outlook
By Josh White
Date: Wednesday 27 Nov 2024
(Sharecast News) - Kettle safety control and water technology specialist Strix Group revised its profit forecast for the year on Wednesday, citing weaker-than-expected consumer demand in key regulated markets and ongoing macroeconomic challenges.
The AIM-traded company said it now anticipated adjusted profit before tax in the range of £18m to £19m on a constant currency basis for the 12 months ending 31 December.
It said its kettle controls division, a core segment of the business, faced subdued trading in the second half, particularly in high-margin regions such as the UK, Germany and the US.
Strix put the decline down to reduced discretionary spending, compounded by cost inflation and geopolitical uncertainty.
While the division maintained its dominant market share, the sales uplift earlier in the year was largely driven by pipeline restocking rather than sustained consumer demand.
Despite the headwinds, Strix reported positive developments elsewhere.
It said the launch of a new low-cost kettle control in less regulated markets, including China, was well received, with the company on track to launch its next-generation controls in 2025, bolstering its market-leading position.
The Billi division meanwhile showed strong growth, with improved sales across Europe and a return to double-digit growth expected in the fourth quarter.
Strix said it planned to expand Billi's product offerings in Australia and the UK, supported by new distributor agreements across Europe.
Meanwhile, the consumer goods division stabilised after restructuring efforts, with revenue for the second half expected to align with the prior year.
The division also secured new retail contracts for 2025 and began manufacturing for a leading baby brand, with additional products scheduled for rollout next year.
Strix added that it had made significant progress on balance sheet optimisation during the year, achieving a net debt leverage of approximately 2x, providing resilience amid ongoing macroeconomic pressures.
Restructuring efforts and enhanced senior leadership across key functions, including treasury, business development, and commercial operations, had positioned the group for medium-term growth opportunities, the board explained.
Reflecting confidence in its long-term strategy, Strix said it intended to reinstate the final dividend for the 2024 financial year, with payment planned for 2025.
At 1110 GMT, shares in Strix Group were down 7.08% at 55.94p.
Reporting by Josh White for Sharecast.com.
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