Strix Group PLC (LON:KETL) Chief Executive Officer Mark Bartlett caught up with DirectorsTalk for an exclusive interview to discuss their preliminary results for the year ended 31st December 2017
Q1: Mark, first off, congratulations on your continued growth in 2017 which was in line with market expectation, can you talk us through the highlights?
A1: It’s been a very positive performance for our first period as a quoted company, as you say. We’ve seen EBITDA up by about 4.8% and gross margin up 1.2% with very strong sales in the regulated market sector. Also, continued to have a very strong cash performance and managed to bring our net debt down to £45.9 million which is just 1.3 times EBITDA.
From a share position in market, we also had a very strong year, we managed to maintain our market position of 38% in volume terms which is around 54% of the value, we’ve stabled at a position across all of the market segments.
We also had a very strong year in the new product segment for our core controls as well, launching a U9 series of controls which is the best-in-class series of controls targeted at all markets, received very well by the marketplace with over 50 specifications already secured in the market. We’ve also had some positive interest in some of our new technologies particularly with the instant flow heater technology.
The Aqua Optima category has also done very well, we saw the UK share double at the end of the year to 12% share, seen as a challenger brand, particularly in the UK and we managed to secure some major contracts with current leading retailers such as Tesco and Boots.
So, overall, a very positive end of the year and we’re very pleased with the performance through 2017.
Q2: As you say, in addition to your core kettle controls, you also launched a number of new products, can you talk us through what these are and how they’re adding to your operations and productions?
A2: A couple of products went through during the course of 2017 and the start of 2018, in fact.
Turbo Toaster is actually a product that is designed to toast bread three times faster than the normal toaster and that’s been launched in a number of territories including the UK and has received very positive feedback.
We also launched hot cup appliances which are single-dispense water appliances, they’ve been very successful and seem to be gaining some additional attraction in the marketplace, particularly in the UK.
Also, with the Aqua Optima team, we actually launched a filter kettle whereby you have a standard kettle with an Aqua Optima filter that allows you to get much cleaner water in the kettle and obviously, stops the limescale building up and actually protects the kettle so lasts longer as well.
So, all three of those were launched during the course of 2017. Just at the end of 2017 and launched in 2018 also was the new baby formula system from Tommee Tippee which has literally just gone onto the marketplace.
Q3: What does your strategy as a group look like for the next 12 months?
A3: From a strategy point of view, it’s probably best to break into the three segments.
So, from the core kettle control point of view, we’re really going to continue doing what we do best, trying to raise the bar using our expertise to develop best-in-class competitive controls to target at all the market segments. We’re going to continue to do our safety actions, making it so we can increase the awareness of unsafe or non-compliant products in the marketplace. Also, continue to execute on our automation strategy in the operations, really trying to put in fully automated lines now for all of the we products to ensure that we’ve got the best quality but also the most competitive cost position as well.
On the new technology point of view, we’re going to continue to leverage on our relationships with both OEM’s and brands and retailers really looking into the new heating technologies to establish some different and diverse technologies within the business. Also, to target what we call the ‘hot water on demand’ segment, things like the single water dispense unit for instance which is showing very strong brand interest at this point in time.
Thirdly, from a strategy point of view, the aqua Optima side of the business, we want to continue to position as a challenger brand and really repeat and expand the success we’ve had in the UK. We want to focus on the China opportunity with our existing partners, there’s some very significant growth opportunities for Aqua Optima over in China and also expand our production capability to be able to meet the increasing demands for the Aqua Optima.
Q4: How has trading been in 2018 so far and are Strix Group well positioned for further growth this year?
A4: Yes, we had a very healthy start to 2018, always an interesting time because of the Chinese New Year for production over in China but it’s been very positive for us. So, with the order book we have at the moment and the performance so far, we’re very confident to be able to achieve the growth and objectives that we have and the market expectations for growth in 2018.
