City round-up: Strix Group; Flowtech Fluidpower

Strix PLC

AIM-listed kettle controls, appliances, and water purification and disinfection solutions group, Strix, is standing down its acquisition and capital investment plans for the time being, it said in a trading update for the year to December 31, 2022, today.

The Isle of Man group said it aims to return to its core operating model of being highly cash generative with no further M&A activity or investment into new factory builds, significantly reduced capex and working capital over the medium term.

It revealed that, despite the challenging macroeconomic and geopolitical environment, the group has achieved adjusted profit after tax for the full year of approximately £23m, which is in line with previous guidance given at the trading update on November 30, 2022.

While the uncertainty across a number of Strix’s key export markets in the fourth quarter remains, the disruptive effects of ongoing lockdowns being enforced in China, where the group has key manufacturing sites, are now beginning to show signs of abating following the recent changes in government policies and it is now anticipated that the Chinese economy will see an improvement in the second quarter of 2023.

The group also revealed it is continuing to implement a range of strategic initiatives to minimise the impact of the headwinds it is facing. These include a new internal restructuring programme and a focus on the reduction of inventory to maximise cash generation.

Following the completion of the £38m acquisition of Billi, with operations in Australia, New Zealand and the UK, on November 30, 2022, the integration remains on track and the company is confident in the financial performance of the business and delivering synergies in line with expectations.

Billi has a strong pipeline of orders, distributors appointed in Asia that are already starting to deliver results, and further new product launches planned for quarter two. Billi has a successful history of growth, with double digit CAGR (compound annual growth rate) over the past five years and is highly cash generative.

Strix’s net debt was £87m as at December 31, 2022. Capital allocation decisions will prioritise debt reduction with a clear plan to get net debt/EBITDA to below 2.0x during 2023 and the board is currently reviewing the level of the final dividend. Further details will be provided at the preliminary results, on March 29, 2023.

During the period, the group also delivered against its scope 1 & 2 net zero targets ahead of its original target.


Flowtech Fluidpower’s Skelmersdale base

Skelmersdale-based hydraulics group, Flowtech Fluidpower, said it has returned to pre-pandemic levels of profitablity, in a stock exchange announcement this morning.

This has involved a reduction in headcount, it said.

Its trading update revealed total group revenues for the year ended December 31, 2022, of £114.8m, a 5.2% increase on the previous year’s level. The board said the underlying profit for the year is forecast to be in line with market expectations.

Overall, the board said it is satisfied with the trading performance in the year and pleased with the progress made against its key strategic objectives.

Actions taken to pass on inflationary cost pressures and actively manage the cost base, notably the reduction in headcount, have assisted in returning the business to pre-pandemic levels of profitability. The performance across the group’s segments is varied but shows strong correlation to the relative strength of the pneumatics and hydraulics markets in which they operate.

Net debt at December 31, 2022 was £16m, which represents a reduction of £3.7m in the second half of 2022. The group expects this trend to continue into 2023 as inventory continues to be reduced.

Non-exec chair, Roger McDowell, said: “I am pleased to report Flowtech has made good progress in 2022. Whilst very conscious of the actions needed to further improve, I am confident in our team and their capability. I remain optimistic for 2023 and beyond.”

The annual results are expected to be published at the end of March.

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