Newcastle-based radiator specialist Stelrad is projecting a rise in its annual operating profit, demonstrating resilience despite facing a period of subdued trading activity in the property and housing sectors.
Navigating Market Challenges
The company, which has its main manufacturing facilities in South Yorkshire, released a trading update covering the ten months leading up to October 31. It reported that revenues had dipped below the previous year's figures, a direct result of declining activity in both property refurbishment and new-build housing.
In response to these market conditions, Stelrad has been actively implementing proactive margin management initiatives and cost reduction activities. A significant part of this strategy involved a restructuring of its Turkish business division, which resulted in an exceptional one-off expense of approximately £1.6 million.
A Path to Improved Profitability
Despite the revenue pressure, the company's strategic focus has yielded positive results. By concentrating on the sale of higher added value products, Stelrad has successfully increased the contribution margin it makes on each radiator compared to the previous year.
This effective management has positioned the firm to forecast an operating profit between £32 million and £33 million for the full 2025 financial year. This projected figure is slightly ahead of the £31.5 million recorded in 2024.
Furthermore, Stelrad announced that its debt leverage ratio is expected to improve, and the ongoing refinancing of the group's loan facility is set to be finalised before the year's end. This move is anticipated to reduce the company's future borrowing costs.
Leadership Confidence and Future Outlook
Chief Executive Trevor Harvey expressed confidence in the company's trajectory. He stated, "Stelrad continues to deliver a strong operational performance and remains on track to achieve growth in adjusted operating profit and margin expansion year-on-year, despite the subdued volume environment."
He attributed this resilience to the group's flexible, low-cost manufacturing base, outstanding customer service, and strong product availability. Mr. Harvey also highlighted the positive impact of the group's recently relaunched website as a key factor in positioning Stelrad for an eventual market recovery.
With a history dating back to the 1930s, Stelrad is a established player in its field. Headquartered in Newcastle, it employs around 1,400 people across facilities in the UK, Turkey, Italy, the Netherlands, Denmark, and Poland. The company has been listed on the London Stock Exchange since 2021.
