Shares in Strix (KETL:AIM) slumped 10.5% to 42p after the kettle safety controls maker warned FY26 profits will miss estimates.
The downgrade reflected a slower-than-expected recovery in the regulated kettle control market. Also at play was a margin squeeze from soaring copper and silver prices.
Strix designs and supplies kettle safety controls and other components and devices involving water heating and temperature control, steam management and water filtration.
Off the boil
For the year to March 2026, Strix is now guiding for revenue of roughly £150 million and adjusted pre-tax profit in the £9.8 million to £10.2 million range.
Equity Development’s David O’Brien trimmed his FY26 pre-tax profit forecast by almost 20% to £9.8 million and his sales forecast by 2.6% to £148.5 million on the news.
The analyst also slashed his FY27 pre-tax profit estimate by more than 35% to £6 million after shaving 4.1% from his sales estimate.
Strix was counting on a Q4 build-up of volumes following two quarters of deferred orders from Chinese OEM customers due to higher tariffs.
In the event, the traditional rally in orders and deliveries ahead of Christmas and Chinese New Year was more muted than expected in key markets.
Regulated markets were affected by continued weak demand in the UK and Germany. Isle of Man-based Strix was also hurt by rising levels of copyist activity in the US online market.
Margin squeeze
Trading in the group’s less-regulated markets has improved, helped by the launch of a low-cost control about a year ago.
But this has proved a double-edged sword. The low-cost control sells at a lower price point and has reduced the margin mix of sales.
While Strix is negotiating price increases with customers to offset higher commodity costs, the main benefits won’t flow through until FY27.
Positives to note
Strix’s update did include some positives.
Volumes continue to build in less‑regulated control markets, the restructured Consumer Goods division has returned to growth, and the recent disposal of Billi has transformed the balance sheet.
The company is now in a net cash position and has capacity for further buybacks. With Mark Bartlett stepping down in May 2026, the company’s search for a new CEO is ongoing.
‘Management has reinforced its cash‑conservation focus and implemented further cost‑reduction measures, while notifying customers of upcoming price increases,’ wrote Equity Development.
‘Given the operational uncertainty, we continue to base our fair value assessment on the estimated NAV of 62p per share,’ added the research firm.
Strix has failed to live up to its promise following a 2017 AIM initial public offering (IPO), and the shares are down 85% over the last five years.
The shares are too high risk for our liking with the company continuing to face macroeconomic and competitive headwinds.
However, costs are being taken out and the balance sheet has been transformed by the disposal of Australian filtered water business Billi. Bulls also point to the group’s next generation control, which should enable Strix to win market share from the copyists.
Read the press release here: https://strix.com/investors.html
You might also like these stories:
