Strix Group: (KETL.L, Aim 100, Market cap.Â Â£365m, 183p, 1.6% of JIC Portfolio)Â
Trading update for the first half ending 30thÂ June
Conclusion: A difficult period but it seems to have weathered it well. Despite net sales down 21% in H1, it is confident of reporting full-year 2020 profit in line with last yearâ€™s Â£28.9m. The bottom line is this is a solid and well-managed company with a leading market position in kettle controls but perhaps not the most exciting growth story. It is currently valued at 12.8x 2020 forecasts, which may drift a little after todayâ€™s update. The prospective dividend yield is 4.3%. I have it as Medium Risk/Medium Reward. Iâ€™m happy with that but am happy that I reduced in April at 178p. I think there is a good chance I will have the opportunity to increase my position at around 160p, where the prospective yield will be a tempting 5.0%. Holder!Â
Â· Resilient H1 performance with marked recovery and solid performance in June
Â· Strong order book visibility for July and August
Â· Continued to prudently invest in compelling growth opportunities
Â· On track to deliver 14 new products this year
Â· External construction of new manufacturing operations in China now complete
Â· Group expects to report full-year adjusted profit after tax in line with the previous financial year (Â£28.9m)
First-half net sales were down 21% but saw a solid performance in June and a strong order book for July and August as the bounce back continues.
Its financial position is fine with net debt of Â£36.9m, some Â£6.0m less than budgeted. It has reduced cost were possible and cap0ex for 2020 will be some Â£4m less than planned having been deferred until 2021.
Outlook and Notice of Interim Results
Despite the impact on the global economy, the Group is robust and as a market leader with an unrivalled global footprint remains confident in future prospects. Following the implementation of efficiency measures and strategic initiatives, the Group is in a strong position to continue to invest in compelling growth opportunities and is well placed to benefit from the acceleration in demand and emerge as a stronger business once COVID-19 passes as well as the second half weighted seasonality of the business.Â
The Company has started to see signs of a marked recovery with a solid performance in June and a strong order book for July and August which underpins its confidence for adjusted profit after tax for the full year to be in line with the previous financial year assuming no significant increase in further lockdown restrictions being imposed or unforeseen macroeconomic shocks.
The Group will be announcing its interim results for the six month period ended 30 June 2020 on 23 September 2020.
Mark Bartlett, Chief Executive Officer, said:
“Strix has delivered a resilient performance in the first half which is testament to the robustness of the business. It has now started to see signs of a marked recovery with a solid performance in June and visibility of a strong order book for July and August as lockdown conditions have begun to ease globally. This makes us cautiously optimistic about the demand for our products in the second half and is consistent with improving global macro-economic forecast trends.
During this period, we have successfully implemented a range of efficiency measures and strategic initiatives to mitigate the impact of the pandemic on the full year profit forecast which we now expect to be in line with the previous financial year assuming no significant increase in further lockdown restrictions being imposed. This has been done whilst continuing to invest in compelling growth opportunities and we remain on track to deliver 14 new products this year, as well as the new manufacturing operations in China becoming fully operational in August 2021. This will ensure that Strix emerges from this crisis well-positioned to capitalise on a market recovery and an anticipated acceleration in demand.”