The CEO of radiator manufacturer Stelrad has hailed a significant year in its first full results as a listed company, in which profits more than doubled in a bouyant market.
The preliminary results for 2021 from the Newcastle-based firm – which has its main manufacturing base in Mexborough, South Yorkshire, as well as sites in Holland and Turkey – showed a 38.5% increase in revenues to £272.3m, while adjusted operating profit more than doubled to £33.2m.
Statutory operating profit came in at £26.6m, a rise of 36% on the previous year, with profitability seeing a boost as a result of the transfer of a small amount of production to its lowest cost facility in Turkey.
Read more : go here for more manufacturing news
Stelrad CEO Trevor Harvey said that sales were higher than pre-pandemic levels, with particular growth in the Ƶ and Ireland market, driven by the global focus on decarbonisation which is leading customers to take up its products supporting low carbon, low temperature heating systems.
Customers are also keen to replace standard panel radiators with its trendier, premium products, which have seen a 50% rise year on year.
Overall sales volumes were up 20% on 2020 and 9% up on its last pre-pandemic year 2019, with good revenue growth across all of its main markets in Turkey, Ƶ and Ireland and Europe.
He warned that it was seeing “substantial” increases in steel prices which had translated in “price optimisation” and was seeing increasing supply chain issues. Price increases of 50% were passed onto customers last year, although Mr Harvey doesn’t envisage significant price hikes this year.
He said: “2021 was clearly an important and significant year for Stelrad. We came to market in November, successfullty completing our IPO and we’ve benefited from a significant raised profile since then. One of the principle reasons why we decided to float was to support our growth ambitions going forward.
“In the last six years we have invested heavily in the business and have completed a £25m incremental investment programme across our three main facilities and have renewed and refreshed our asset base to the extent there is now the best in the industry to date.
“Macro trends such as the ongoing focus on decarbonisation and the growing appeal of premium steel panel radiators continue to provide a positive backdrop for our business and support ongoing demand for our products. As a result, the group remains confident in its ability to deliver on its long-term growth plans.
“Prices went up considerably last year. Given the fact that steel prices have doubled from £550 to over £1,000 per tonne, clearly all steel consuming industries where faced with having to pass those onto consumers.
"We had four price increases last year in most of our markets and in total that was about 50% increase, which might seem significant but when you realise the average cost of a steel panel radiator is typically £60 to £70 now, that means it’s gone up from £40 to £60, so the percentages sound significant but the pound note reality is not that significant.
“I don’t know if we’ll be able to hold prices at their current levels for the entire of 2022 because clearly the conflict in the Ukraine has disrupted the steel market somewhat. It is possible that the lack of steel production in Ukraine and Turkey could well affect steel prices. Whether it’s a short term blip is still to be determined. I don’t anticipate any significant increases as we saw last year.”
As part of its £25m investment programme Stelrad transferred some production from its mainland European sites to the group’s facility in Turkey, at the height of the pandemic.
Mr Harvey said he doesn’t anticipate moving further volume from the Ƶ to Turkey, adding: “Our Ƶ business is currently performing extremely well.”
Stelrad, which has 1,300 employees, added that trading so far this year had been in line with management expectations, with a reduction in production volumes more than offset by improving margins.
