North East and South Yorkshire radiator manufacturer Stelrad says it is prepared for a shrinking market despite posting record profits.
The London Stock Exchange-listed firm, which has bases in Newcastle, Mexborough, Holland and Turkey, said full year trading for 2022 had been as anticipated, with difficult economic conditions weighing on its key markets. In an update to investors Stelrad said group revenue grew about 15% on the previous year to £312m and that it expected to report record adjusted operating profit of around £34m.
The performance includes the benefit of Stelrad's £24m acquisition of Italy-based DL Radiators in spring last year, a move it said had pushed leverage to 1.6 times Ebitda. Work is under way on a new production line at DL's Friuli-Venezia Giulia facility.
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Lower production volumes across the year were said to have been more than offset by stronger margins as a result operational improvements. And the firm thinks rising energy costs across Europe, along with the wider decarbonisation agenda, will continue to drive demand for its higher value premium radiators.
Despite headwinds and acknowledgement that trading conditions would be challenging in 2023, Stelrad said its flexible business model and strength and breadth of its customer and supplier relationships gave it resilience heading in to the year.
Trevor Harvey, chief executive of Stelrad, said: “Despite well-publicised macroeconomic headwinds in our end markets, the group performed broadly in line with its expectations in 2022, a testament to the resilience of our business model and market position, the robustness of our strategy and the dedication of our team.
"We have more than offset a decline in volumes with proactive margin management initiatives while the acquisition of DL Radiators offers considerable potential for the future by extending our range of heat emitters and providing access to new markets and channels.
"We remain committed to our strategic objectives of growing market share, improving product mix, optimising routes to market, and positioning the business for decarbonisation, and, while we anticipate 2023 will be more challenging with further reductions in market size likely, we have proven that the strength of our business can meet these challenges and continue to deliver long-term value for all of our stakeholders.”
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