Stelrad Group (LON:SRAD) reported progress across several key performance indicators in its latest results presentation, even as revenue declined amid subdued end markets. CFO Leigh Wilcox led the call in place of CEO Trevor Harvey, who was absent while recovering from a minor medical procedure.
Wilcox reiterated the group’s positioning as Europe’s market-leading radiator manufacturer, serving more than 500 customers across 40 countries. He cited Stelrad’s number-one ranking in the hydronic heat emitter market overall and in steel panel radiators, with stated market shares of 15.7% and 24.2%, respectively. The company’s strategy remains focused on 10 core European markets and a portfolio of brands including Stelrad, Henrad, Termo Teknik, DL Radiators, and Hudevad.
Revenue down, profit and margins up
Despite lower revenue, adjusted operating profit increased by £1 million, or 3%, to £32.5 million. Adjusted operating margin rose 0.8 percentage points to 11.6%, while return on capital employed improved by 3 percentage points to 30.1%.
Management attributed the profit performance to a combination of factors offsetting the lower volumes, including:
- Lower steel prices year-on-year
- An increase in the average radiator size sold in the U.K.
- A higher mix of premium panel products
- Early benefits from restructuring initiatives
- Structural currency benefits related to the company’s Turkish operations
Wilcox said the group’s “core KPI” of contribution per radiator increased for an eighth consecutive year to £20.50, nearing its medium-term target of £21. He also highlighted customer service performance, including an on-time delivery rate of 98% in the U.K.
Dividends, cash flow, and leverage
The board proposed a higher final dividend, describing it as consistent with the company’s progressive dividend policy and supported by strong cash generation and balance sheet strength. Wilcox said the final dividend would be up 5% from the prior year, while total proposed dividend for 2025 was stated as £0.0809, representing a 3.9% increase.
Stelrad reported stronger operating and free cash flow despite restructuring costs and a working capital impact related to a proactive U.K. price realignment. Wilcox said working capital was actively managed, aided by reduced capital expenditure. He also noted higher tax payments as the U.K. business became cash taxpaying after utilizing historical tax losses, and said interest payments benefited from lower interest rates and a reduced debt position.
Net leverage (based on net debt before lease liabilities) fell to 1.16x EBITDA, which Wilcox said was a “strong improvement” and something the company expects to reduce further in 2026. In response to investor questions, Wilcox said deleveraging provided more capital allocation “optionality,” but emphasized dividends first and then “an organic approach to sensible investment” in strategic geographies.
Segment performance and restructuring impacts
In the U.K. and Ireland segment, Stelrad said revenue fell 4.4% while sales volumes declined 6.9%. Wilcox said inflationary price increases and the third consecutive year of larger average radiator sizes helped offset volume declines. Segment operating profit rose £0.4 million, supported by pricing, materials, restructuring benefits, and structural currency effects.
In Europe, sales volumes declined 3.4%, with improvements in Belgium, France, the Netherlands, and Poland offset by weaker performance in Sweden, Italy, and the Baltics. European operating profit declined by £0.6 million, with adverse volumes and mix partly offset by restructuring and structural currency benefits.
Wilcox highlighted challenges at DL Radiators S.p.A., which he said had been affected by weak German and French markets since its acquisition in July 2022. The business also faced pressure from a “significant low margin and latterly loss-making contract” supplying steel panel radiators. Stelrad said attempts to reset pricing during 2025 were unsuccessful and that the group decided to terminate supply under the contract effective at the end of 2025.
Exceptional items totaled £14.9 million, including £12.6 million of non-cash impairment charges predominantly related to DL Radiators S.p.A. These included impairments of goodwill (£2.7 million), customer relationships (£1.4 million), property, plant and equipment (£5.8 million), and an inventory provision (£2.3 million). Remaining exceptional items were £2.7 million, of which £2.3 million were expected to be cash costs.
On the Q&A, Wilcox quantified the contract exit at roughly €13–€14 million of revenue and around 175,000 radiators, primarily tied to Germany. He said the exit would reduce future revenue and volumes and could impact market share in Germany, but would improve contribution and create an opportunity to reduce fixed costs while refocusing DL Radiators S.p.A. on electrical and designer ranges, which he said were central to the acquisition rationale.
Premiumization and decarbonization themes
Stelrad pointed to continued progress in shifting product mix toward higher-margin lines. Premium panel steel mix reached a record 6.4% of steel panel radiators, and designer mix was described as broadly stable at 14.3%. Wilcox said premium mix growth was supported by gains in the Netherlands, Belgium, and Germany.
He also described Stelrad’s focus on aligning its portfolio with the shift toward decarbonized heating systems, including promoting higher output radiators, developing solutions for higher temperature systems, and expanding electric heating ranges. In the U.K., Stelrad said volumes in higher output ranges such as K3 Vertical and High 900 radiators were up 128% since 2022, and electric heating volumes had increased 208% since the introduction of electric ranges in 2023.
Asked about risk from the Middle East conflict, Wilcox said steel remained the primary focus given raw materials represent about 50% of cost of sales. He added distribution costs were about 6% and energy about 2.5%–3%, with energy hedges in place across U.K. and Western European facilities for “the next year or so.” On steel, he said Stelrad has monthly visibility and index-linked mechanisms, with three to four months of visibility before changes hit results, and said the company has historically passed through increases in an orderly fashion.
Outlook: stable but subdued markets
Looking ahead, Wilcox said trading so far was “steady” and in line with expectations, with end markets “stable but subdued.” He said Stelrad does not expect meaningful change “for at least the first half of 2026,” and emphasized the company is focused on driving growth through commercial and operational actions rather than relying on a market recovery.
In webcast Q&A, Wilcox outlined the company’s then-current view for 2026 market assumptions: new build up 4%–5% year-on-year and RMI up around 1.5%, both described as second-half weighted. He also provided adjusted tax rate guidance of 34% for FY2026.
Wilcox said Stelrad intends to maintain flexibility in manufacturing capacity, emphasizing the group does not want to remove capacity in a way that could hinder its ability to capitalize on a recovery. He also said the company remains open to M&A—particularly in adjacent, closely aligned products—though organic growth is currently the priority.
About Stelrad Group (LON:SRAD)
Stelrad is a leading specialist manufacturer and distributor of steel panel radiators in the UK, Europe and Turkey, selling an extensive range of standard and premium steel panel radiators, low surface temperature radiators, towel warmers, decorative steel tubular radiators and other steel “column” radiators.
