14th Aug 2023 13:13
(Alliance News) - Stelrad Group PLC still has attractive prospects compared to its peers, analysts said on Monday, with relatively strong half-year results leaving it well-placed to "navigate choppier waters" despite gloomy outlooks across the radiator sector.
The stock was up 6.2% to 120.00 pence each in London on Monday afternoon.
In first half of 2023, Stelrad said pretax profit more than doubled to GBP10.3 million from GBP4.7 million a year earlier.
Adjusted operating profit, however, was down 26% to GBP14.0 million from GBP19.0 million, while adjusted post-tax profit was down 42% to GBP8.1 million from GBP13.9 million.
Peel Hunt analysts Sam Cullen and Clyde Lewis highlighted that profits were "well down," but added this was "largely as expected".
Stelrad's revenue was up 4.6% to GBP157.0 million from GBP150.1 million, a record amount. It was up 6.2% to GBP157.0 million from GBP147.8 million on a pre-IAS 29 accounting basis.
Stelrad was required to adopt IAS 29 in respect of its Turkish subsidiary during the interim period due to inflation in Turkey exceeding 100% over a three-year period.
At the start of 2023 the Turkish business's functional currency was changed from Turkish lira to euros, meaning that IAS 29 is no longer being applied after this date.
In the UK & Ireland, pre-IAS 29 revenue was down 0.7% or 1.0% on an organic basis, up 20% or down 22% organically in Europe, and down 24% or 30% organically in Turkey & International.
Stelrad declared an interim dividend of 2.92 pence each to shareholders, unchanged from a year earlier. It said this reflected the board's confidence in the group's prospects and balance sheet.
Looking ahead, Stelrad said its full-year outlook remained unchanged and that it was confident in its long-term growth plans. It expects to launch a new electric range in the UK during the second half year.
"Despite challenging macroeconomic conditions across a number of countries, Stelrad's leading positions mean that the group remains well placed to outperform the market and deliver on its full year expectations," said Chief Executive Officer Trevor Harvey. He said this followed a "pivotal" first year as a public limited company in 2022.
"The resilience of our business model, alongside our experience of navigating previous market downturns, means that the group is well positioned to capitalise once markets improve," he added.
Peel Hunt concurred, saying: "While the backdrop remains tough, as the lowest-cost producer, Stelrad should be better placed than others to navigate choppier waters, and we expect to see continued market share gains in [the second half]."
Davy Research analysts Andrea Collins and Flor O'Donoghue commented: "Given its tough comparative period and the very downbeat rhetoric from its radiator peers in recent weeks, we see Stelrad's reiteration of its current year expectations as a strong result."
Peel Hunt currently rates Stelrad at 'buy' with a 150.0p target price. Davy rates it at 'outperform' with a 213p target.
By Emma Curzon, Alliance News reporter
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