Record half year for home safety products supplier Sprue Aegis
COVENTRY-based home safety products supplier Sprue Aegis has seen a strong half year with revenue more than doubling and operating profit tripling on the same period a year ago.
The strong performance has enabled the firm to recommend a 25% increase in dividend – and it said that but for currency fluctuations then the performance would have been even better.
For the six months to the end of June 2015, revenue climbed to £56.5m (H1 2014: £23.8m) and operating profit pre-share based payments charge rose to £9m (H1 2014: £2.7m). At H1 2014 exchange rates, H1 2015 operating profit (pre-share based payments charge) would have been approximately £6.1m higher at £15.1m.
France significantly out-performed both the corresponding period last year and management expectations for H1 2015, while Germany also performed well contributing to the overall sales increase.
In the UK, sales increased 8% on the first six months of last year, helped by growth in UK Fire & Rescue Services revenue which included £2.3m of sales funded by the Department of Communities and Local Government.
Graham Whitworth, executive chairman, said: “Despite significant foreign exchange headwinds in the Eurozone with sterling, in particular strengthening against the euro and weakening against the US dollar compared to H1 2014, I am delighted to report record first half trading results for Sprue.”
He said Continental Europe continued to offer significant sales opportunities for the group. While sales into France are softening, it said the 10-year product replacement cycle in Germany was about to start and, in addition, two German states with approximately 10 million homes are required by law to fit smoke alarms before December 2017.
It said German customers typically sought increased levels of product technology with wireless connectivity and, therefore, the sales value of replacement product sales was potentially significantly higher than the value of previous sales.
“Actions are underway to relocate the manufacturing activities of CICAM, Jarden’s majority owned manufacturing facility in China, which supplies 100% of the group’s Sprue and BRK smoke alarms, together with the group’s BRK carbon monoxide alarms. I am pleased to report that the relocation plan is on track,” added Whitworth.
Over time, he said the company expected to secure a major foothold in the UK Trade sector with a new range of market leading mains powered products.
The trial to wirelessly connect Sprue’s home safety products to the internet using Sprue’s own Wi-Safe 2 technology is ongoing and he said opportunities for potential revenue were highly encouraging.
“We are working to commercialise our first connected (internet of things) product offering which will allow remote monitoring of our products over the internet. In addition, we have an exciting array of other new products under development which will expand our addressable markets,” he said.
The strengthening of the technical team over the next twelve months adding around 12 new engineers – almost doubling its size – will also bring greater certainty to Sprue’s revenue from new products and emerging markets, he added.
He said the company continued to look for acquisitions which would add value to the existing business but would not rush into something if the fit was not right.
“If we could identify an acquisition that would strengthen our strategic and market position to drive long term shareholder value by enhancing our technology and product offering and / or accelerating incremental revenue and profit opportunities, we would pursue it. However, I can assure shareholders that the board will apply strict acquisition hurdle criteria before approving any such acquisition and, in the meantime, we will continue to maintain our significant cash reserves,” said Whitworth.
