Stelrad flags continued subdued trading

(Sharecast News) - Stelrad Group said in an update on Monday that trading conditions remained subdued in the 10 months ended 31 October, as weak renovation and new-build activity continued to weigh on volumes, although margin management and cost controls helped support profitability. The radiator manufacturer said that while second-half performance showed some stabilisation in the rate of volume declines, ongoing economic uncertainty continued to suppress demand, leading to lower revenues year-on-year.

It said its focus on "operational excellence", higher added-value products and proactive cost measures was expected to deliver another increase in contribution per radiator compared with last year.

In the absence of any improvement in market volumes, Stelrad said it now expected adjusted operating profit for 2025 in the range of £32m to £33m, still ahead of the £31.5m it reported in 2024, with operating margins set to rise.

Stelrad added that its debt leverage ratio was on track to improve further this year, supported by strong cash management, and said the refinancing of its loan facility, expected to complete before year-end, would reduce future borrowing costs.

The group warned that its effective tax rate would increase due to non-cash deferred tax charges and the geographic mix of profits.

It said its restructuring of the Turkish business in the second half, which would incur an exceptional cost of about £1.6m in 2025, would improve operational margins in future periods.

Management said further opportunities were being assessed to maintain and strengthen its competitive position.

The relaunched Stelrad.com platform had also gained traction with increased site traffic and customer engagement.

"Stelrad continues to deliver a strong operational performance and remains on track to achieve growth in adjusted operating profit and margin expansion year-on-year, despite the subdued volume environment," said chief executive Trevor Harvey.

"Whilst the continued delay in end-market recovery remains frustrating, Stelrad's flexible, low-cost manufacturing footprint, outstanding customer service and unmatched product availability means that the group remains well-positioned for the eventual recovery in our end markets, and I remain confident in our ability to deliver long-term value for our stakeholders."

At 0926 GMT, shares in Stelrad Group were down 13.81% at 146.1p.

Reporting by Josh White for Sharecast.com.