Radiator maker Stelrad Group has turned up the heat on revenue and profits as it says rising energy costs are driving customers to its products.
The Newcastle-based plc, which also operates factories in Mexborough, Holland and Turkey, said adjusted operating profit was £19m in the first half of 2022 - 13.1% higher than the same period last year - thanks to optimisation of its Turkish operation and more premium steel panel products sold.
Turnover was £150.1m, 17.4% more than the same period in 2021, as the firm pointed to "margin management" amid growing steel, logistics and energy costs. The gains came as Stelrad pointed to lower sales volumes but higher pricing to recover some of those inflationary expenses.
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Volatility in the price of steel - a key component for Stelrad - was said to have continued into the first half of this year but Stelrad said it had a track record of managing this with good visibility of prices for three-four months ahead. During the first half, Stelrad also completed its relocation of a production line to its lower cost facility in Turkey and said there was unlikely to be further such moves.
In Italy, the firm completed its £24m deal to acquire DL Radiators - a £75.9m (€89.9m) revenue business - that will receive a £3.8m (€4.5m) investment in a new production line, due to be operation in the first quarter of next year. Speaking to Business Live, Stelrad CEO Trevor Harvey said the group was well placed to make further acquisitions in Europe and hinted that it could target manufacturers of other products complementary to radiators.
On the outlook Mr Harvey said he expected customers to continue seeking out higher value premium radiators for their homes despite cost of living pressures. The group's specified market - which is radiators ordered for new build properties - accounts for about 40% of its business and was said to have "held up pretty robustly" in the first half.
Mr Harvey said: "It would be naive of me to ignore the macroeconomic factors that are becoming increasingly evident to everyone. But, despite the fact that we're watching carefully those factors and monitoring every indicator that's possible manage, we have, today, restated our confidence in the full year forecast and in fact we've enhanced that because of our acquisition.
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"If there was further confidence needed of the company's business model and its market position, we've recommended an interim dividend of 2.92p per share. That signals the board's confidence in the outcome for this year."
In a separate update to investors, Mr Harvey said: "After entering 2022 with good momentum, we are pleased to have delivered strong financial performance during the first half of the year, testament to the underlying resilience of our business, with increased revenues and improving margins per radiator more than offsetting previously flagged volume reductions. Rising energy costs across Europe are sharpening consumers' focus on the need for more energy efficient heating solutions and this, combined with the ongoing decarbonisation agenda, is expected to drive increased, long-term demand for our products."
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