Kettle safety controls manufacturer Strix (KETL:AIM) reported full-year revenue to 31 December 2019 of £95.4m, up 2% atconstant currencies, while adjusted operating profit increased by 10% to £32.1m, slightly above market expectations. The shares gained 11% to 133p.
Chief executive Mark Bartlett commented, ‘we have maintained our focus on manufacturing and production quality which has led to a 29% improvement in customer quality parts per million.’
The company maintained its value share in both regulated and less regulated markets at around 73% and 34% respectively, while increasing its share to approximately 49% in the Chinese domestic market.
CORONAVIRUS
The impact from the pandemic has so far been limited to the Guangzhou manufacturing plant which was closed for an extra week in line with the government imposed policy. Production resumed on 10 February and has since recovered close to full capacity, sufficient to meet customer demand.
In addition 20 of its largest original equipment manufacturing (OEM) customers have resumed production.
The firm provided face masks, thermometers and sterilisers to keep staff safe as well as enhancing the sterilisation zone at the factory through the newly acquired HaloSource product.
Strix is closely monitoring the potential impact on demand and if historical patterns are a good guide, kettles are seen as a household essential purchase and therefore should be resilient to slowing consumer confidence.
EFFICIENCIES
Increasing automation has decreased the reliance on labour and helped to increase efficiencies. In Guangzhou 10 out of 32 production lines are now automated and able to produce one component every two seconds, compared with competitors producing them in 6 to 8 seconds.
The company will continue to invest in production automation with a further five lines planned for this year which will also help control rising wage costs in China.
The planned construction of the group’s manufacturing plant remains on schedule to complete in August 2021 with costs within budget.
Management are taking a prudent approach to capital allocation given the broader effects of the coronavirus pandemic and working on several self-help initiatives including new products and efficiencies to minimise full-year impact.
The dividend was raised 10% to 7.7p.
