Stelrad Reports Revenue Dip Amid Market Challenges in H1 2023

Stelrad, a prominent radiator manufacturer based in Newcastle, has reported a decline in revenues for the first half of 2023, reflecting challenges in a subdued market. The company, which employs over 1,500 people across its main manufacturing facility in Mexborough, South Yorkshire, as well as in locations including the Netherlands, Italy, Turkey, Denmark, and Poland, recorded a revenue drop of 4.6% to £136 million for the six months ending June 30, 2023.

Despite the revenue decline, Stelrad managed to achieve an adjusted operating profit of £15.9 million, which marks a slight increase of 1.1%. The company attributed this improvement to effective margin management and structural currency gains. However, the overall financial picture was impacted by an exceptional £12 million impairment charge related to assets from its acquisition of Radiators SpA, an Italian design brand, leading to a statutory operating profit decrease of more than 75% to £3.8 million.

Regional Performance and Market Share

In the UK and Ireland, Stelrad experienced a revenue decline of 5.8%, partially offset by a favorable increase in average radiator size, which mitigated a 9.6% drop in volume. The European market also saw a revenue decrease of 5.9% due to reduced volumes. In contrast, revenues from Turkey and international markets rose by 17.9% to £8.5 million, driven by increased demand in the Turkish market.

Stelrad continues to maintain a leading market share of 19.9%, although this figure has dropped from 20.9% in 2023, attributed to variations in market dynamics across the regions it operates. Excluding its activities in Russia, where the company has opted not to engage, its market share stands at 25.4%.

Outlook and Future Plans

Looking ahead, Stelrad’s board expressed a cautious optimism about the market, anticipating a modest recovery in volume during the second half of the year. They emphasized the company’s strong market position, sustainable competitive advantages, and operational excellence as key factors in their strategy. The management stated: “Whilst the current market environment remains subdued, the Board expects a modest level of market volume improvement in the second half of the year, augmented by the strength of Stelrad’s market position.”

Trevor Harvey, Chief Executive Officer, remarked on the company’s resilient financial performance amidst ongoing economic uncertainties. He stated, “During the period, we delivered a resilient financial performance against a backdrop of ongoing economic uncertainty suppressing volumes in the group’s key markets.” Harvey underscored the importance of being prepared for potential volume increases when market conditions improve, noting that past recoveries have often occurred rapidly.

In a positive development for shareholders, the company announced a 2% increase in the dividend per share, raising it to 3.04p.

As Stelrad navigates the current challenges, it remains focused on maintaining its market leadership while preparing for future growth opportunities, with the aim of enhancing shareholder value in the long term.