Yesterday Strix announced strong results for FY19, while also demonstrating resilience and managing the impact on its business from COVID19. Strix has delivered £36.9m EBITDA, slightly ahead of our expectations. Total dividends of 7.7p have been announced, which is 10% growth year-on-year (yoy), offering a 6% yield, nearly 2x covered.
Net debt of £26.3m is at multi-year lows, with continued strong cash generation funding both growth capex and new product development. Debt now sits at a modest 0.7x ND/EBITDA ratio.
Regarding COVID19, "The impact on Strix has thus far been limited … Strix’s products have historically had limited correlation with short term consumer confidence … our profitability model strategically targets the second half of 2020’. Manufacturing in China is again at 88% capacity and all of the top 20 OEM customers are back in production.
Strix is the leading player in the global kettle controls market. This is a resilient market, which grew at c. 3% in 2019. The company today highlights stable market share in 2019 across territories, with some market share gain in China.
In addition, Strix is seeing healthy growth in Water/Appliances, with plans for a launch programme of over a dozen new products across all categories in 2020. Strix confirms that the new, enlarged manufacturing facility is well on track, and where completion is expected in August 2021.
The Strix share price has fallen by more than a third in 2020. Yet, for those investors with the patience to ride out current macro headwinds, Strix is a unique strategic asset listed on the UK market, with industry leading margins and many growth initiatives underway.
