Stelrad Group (LSE:SRAD), the UK-headquartered specialist radiator manufacturer, reported adjusted operating profit of £16.7 million for the six months ended 30 June, up 4.9% despite a 9.1% decline in revenue to £124.0 million.
The adjusted operating margin rose 1.8 percentage points to 13.5%, as cost discipline and the exit from a loss-making contract offset a 14.6% drop in sales volumes. Statutory operating profit came in at £15.7 million after £1.0 million of exceptional items, down from £3.8 million a year earlier when the comparator included £12.0 million of non-cash exceptional charges.
Revenue fell across all three regions: UK & Ireland declined 4.0% on weak new-build and repair, maintenance and improvement (RMI) demand; Europe dropped 7.4%, partly reflecting the loss-making contract exit; Turkey & International slumped 60.6% to £3.4 million after a deliberate decision to reduce sales there.
Contribution per radiator rose to £24.32 from £20.33, though the company expects this to move toward its sustainable medium-term target of above £21 as it targets volume growth in select territories.
Free cash flow swung to an outflow of £0.2 million from a £1.8 million inflow, reflecting a seasonal working capital build and higher tax payments.
Leverage stood at 1.29 times net debt before lease liabilities, up from 1.16 times at the end of December but down from 1.48 times a year earlier, with further deleveraging expected in the second half.
The board raised the interim dividend by 5% to 3.19p per share, payable 23 October.
"We have maintained our market leadership position and continued to optimise our cost base", said chief executive Trevor Harvey.
Trading in the second half to date is in line with expectations, and the company's full-year outlook remains unchanged.
