Radiator manufacturer Stelrad has reported a rise in adjusted operating profits despite a further decline in its core markets, according to interim results published on the London Stock Exchange. The Newcastle-headquartered company, which operates its main factory in Mexborough, South Yorkshire, saw adjusted operating profits climb 4.9% to £16.7m in the six months to the end of June, up from £15.9m in the same period last year.
Revenue Falls but Profitability Improves
Revenue for the period totalled £124m, down from £136.5m in the first half of 2025. The company attributed the profit growth to strategic initiatives aimed at boosting profitability and offsetting persistent market weakness. Group volumes declined by 14.6% during the half-year, reflecting subdued demand across several key markets, including the UK and Ireland.
In the UK and Ireland, volumes fell by 6.6%, driven by weakness in new build housing and the repairs, maintenance, and improvement sector. European volumes dropped by 14.4%, while the smaller Turkish and international segment saw a dramatic 61.8% decline following a deliberate decision to reduce sales in that region.
Regional Challenges and Strategic Adjustments
Investors were informed of a notable decline in Germany, where the company exited a loss-making contract, and in France, where there was a reduction in higher-volume, lower-margin business. These moves are part of Stelrad's broader strategy to optimise its cost base and focus on more profitable segments.
Despite the challenging trading environment, Stelrad maintained its market leadership position and continued to make progress towards its medium-term targets. The company stated that trading in the second half of the year has so far been in line with expectations.
Financial Position and Dividend Increase
At the end of June, the group held cash of £17.6m, compared with £19m at the end of December, and had undrawn facilities of £25.3m. Net debt before lease liabilities stood at £57.5m, up from £51.1m at the end of December but down from £64.8m at the same point last year. Directors anticipate a reduction in net debt by the year-end, supported by seasonal working capital investment patterns.
In a sign of confidence, Stelrad will pay an interim dividend of 3.19p per share in October, an increase of 5%. The company said the uplift reflects a strong group balance sheet and confidence in future growth prospects and increasing cash generation.
CEO Commentary and Outlook
Trevor Harvey, chief executive officer, commented: "During the period, we delivered a strong financial performance against a backdrop of ongoing economic uncertainty suppressing volumes in the group's key markets. Crucially, despite this environment, we have maintained our market leadership position and continued to optimise our cost base."
Harvey added: "The board remains confident in its strategic pillars and in driving continued shareholder value. Our operational excellence initiatives, underpinned by our competitive advantages and market positioning, mean that Stelrad remains well-placed to target market share gains across the geographies in which we operate."
Stelrad's management expressed cautious optimism about a potential market recovery, though they acknowledged uncertainty over the timing. The company believes it is well positioned to capitalise on any upturn in demand, leveraging its operational strengths and market presence.
