Stelrad Group H2 2024 Earnings Call Transcript

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Provided by Quartr
March 7, 2025

There are 8 speakers on the call.

Operator

Good morning. My name is Trevor Harvey. I'm Stellrad Group's CEO, and here with me today is Lee Wilcox, Group CFO. The agenda is as shown on the slide. After a brief overview of our results, we'll have a detailed review of Stelrad's financial performance, followed by a business review.

Operator

On the summary and outlook, we'll then move on to a Q and A session. I'd like to begin with a brief overview of Stellrad's twenty twenty four performance. I am pleased to report a continued strong performance for the business despite the challenging market backdrop. Our adjusted operating profit increased by 7.6% compared to the prior year to million, while our focus on proactive margin management initiatives has resulted in a seventh consecutive year of increased contribution per GBP20 per reader for the first time. In addition to cost and price management actions, we saw positive mix changes, notably in The UK market, where increased premium steel panel penetration combined with volume growth in high output conventional radars underpinning our confidence in the long term opportunities provided by the structural drivers of increased premiumization and the drive for decarbonization.

Operator

Macroeconomic conditions remain challenging in 2024. And as a result, revenue declined by 5.7%. But return on capital employed was up 1.6 percentage points relative to 2023 at 27.1%. Those of you who attended our capital markets event late last year will recall that providing market leading levels of customer service and product availability is one of Stelrad's key competitive advantages, alongside flexible low cost manufacturing and the group's leadership of the European heat emitter market. During 2024, on time in full delivery performance in The UK and Ireland was an impressive 98%.

Operator

Our strong financial performance has enabled us to increase total dividends in 2024 by 2%. And while we are not expecting the wider market backdrop to improve significantly during the first half of twenty twenty five, we entered the year making good progress towards our medium term targets and remain effectively positioned to outperform our peers and deliver continued growth for our stakeholders independently of future market recovery. I would now like to hand you over to Lee for a more detailed review of the group's financial performance.

Speaker 1

Thanks, Trevor. Good morning, all. Moving first to Slide six and our financial snapshot. The format consistent with that presented as our interim results and it includes some of our financial KPIs. The full year story continues to be consistent with how we reported the half year.

Speaker 1

On a headline basis, despite declining revenue, there has been strong improvement in other profit and loss measures. Significantly, adjusted operating profit has increased by $2,200,000 to $31,500,000 and adjusted operating profit margin increased by 1.3 percentage points to 10.8%. Aimed by strong profit growth and the devaluation of the euro net GBP, the turn of capital employed decreased by 1.6 percentage points to 27.1%. The chart also highlights that we have proposed to increase the final dividend by 2% in line with the interim dividend increase, which reflects balance sheet strength and confidence in the group's future growth prospects and cash generated potential. As flagged previously, we made an investment of work capital in the year principally to ensure that we are well placed with one to market demand and as a consequence, our operating cash flow conversion is lower in the year.

Speaker 1

We expect this to recover strongly in the medium term. Positively, despite a lower operating cash flow conversion, our leverage ratio improved in prior year with strong profitability growth and small reduction in net debt. Following this over to you, we will now explore performance in more detail starting with Slide seven. On this slide, we highlight the recent trends in revenue, adjusted operating profit, adjusted earnings per share and dividend per share at group level. In the subsequent slide, we will examine the revenue adjusted operating profit in more detail at segmental level.

Speaker 1

Revenue year on year reduced by 5.7%. The decline in revenue was due to a 5.8% decrease in sales volumes during the year and the impact of the euro devaluating its GBP, partially offset by selling price benefits. Selling prices have benefited from a positive UK mix and the impact of UK price increase, which was applied to recover ongoing inflationary cost rises, partially offset by an adverse mix and modest price concessions in some European markets. While sales volumes were down by 5.8% in the year, volumes were down eight percent in half one and only down 3.5% in half two. But certain key geographies in Europe showed a year on year increase in volumes led by business gains.

Speaker 1

Despite the revenue reduction, adjusted operating profit has grown by $2,200,000 or 7.6 percent to $31,500,000 with a 1.3 percentage points increase in margin. There are many elements of the movement including favorable polymers in The UK with the ambrosite irradiator salt increasing by over 6%. Ongoing operational control including the benefits of the Q4 'twenty three restructure we saw additional volume of six to our low cost Turkey facility and the reduction of fixed costs in our Western European and UK businesses. And finally, strong ongoing margin management that helped to ensure that price movements were controlled successfully. Adjusted earnings per share have reduced versus prior year, but the comparison benefits from a significant one off deferred tax credit.

Speaker 1

Excluding deferred tax credit, it's pleasing earnings growth with improving operating profits only slightly offset by an increase in interest charges. The fourth chart shows a proposed 24 total dividend of 7.79p per share, representing a 2% increase. This chart shows how we have maintained and latterly increased earnings dividends despite the earnings reductions in 2022. A detailed income statement, which highlights the moving interest and tax, is included in the appendices. Now moving to Slide eight, where we can examine the volume and premium panel mix trends in more detail.

Speaker 1

In respect to volumes, we can see the 5.8% reduction year on year with high interest rates and inflation continuing to suppress both RMI and new productivity. Positively, the group has achieved year on year volume increases in Belgium, Netherlands and Poland, driven by our sustainable competitive advantages, including our flexible low cost manufacturing, leading level to product availability and customer service and a competitive position of scale. The group premium panel penetration percentage grew slightly to 5.7%. Although overall volumes fell in line with the market, there was a pleasing increase in the penetration of premium panel products in The UK and Ireland, where traditionally these products are underrepresented. And as outlined at our recent capital markets event, this is where we are focusing our efforts.

Speaker 1

The continued improvement in the group contributed per radiator measure clearly highlights the impact of proactive price cost management in addition to the benefits of strong product mix in UK and Ireland. On Slide nine, we can see how revenue developed by operating segment. Despite a 7.2% decline in sales volumes, UK and Ireland revenue only fell by 1.5%. The trend is similar to half one, sales in the segment benefit from an increase in the average size in terms of heat output for each radiator sold and a greater penetration of premium panel radiators. Strong sales of larger K3 vertical radiators have continuing momentum supported by voting regulation changes.

Speaker 1

We were also able to implement The UK price increase in half two to recover inflationary cost rises. Within Europe, sales volumes declined by 0.6% with business gains in Belgium, Netherlands and Poland enabling a 4% year on year growth in half two. Despite improving volume performance, euro revenue in GBP terms have been adversely impacted by 2.7% due to a year on year strengthening of the pound against the euro. Additionally, European revenues were negatively impacted by adverse country and customer mix and the impact of modest price concessions. Sales in Turkey and China are birthed down in prior year with ongoing weak economic activity in Turkey.

Speaker 1

On the following slide, we provide a bridge to the grid operating profit, giving an overview of the key movement before later looking at profit at performance at their mental level. The bridge clearly highlights the adverse impact of 298,000 unit reduction in sales volume. But more importantly, the bridge highlights the favorable impact, the change in mix, proactive initiatives and margin management that make the group profitability. We believe that the improvements in the group profitability are now embedded in a stronger per Radiator contribution. We believe the group well positioned for market recovery in the medium term.

Speaker 1

The next slide shows how we have changes that are due to operating profit have impacted segmental profitability. In UK and Ireland, profit increased by $5,100,000 or 20.7%. Whilst the segment continues to be adversely impacted by the most significant volume decline in the group, it has benefited from an improvement product mix, favorable selling and material prices and the 2023 restructure. Operating profit in Europe has fallen by 1,200,000.0 or 12.4% with improving volumes aiding second half performance. The segment has benefited from the 2023 restructure and margin management.

Speaker 1

However, adverse country and customer mix, a small reduction in volumes and inflationary cost increases combined to more than offset these benefits. The performance of Radius SPA within the Europe segment has has been impacted by the weakness of the German and French markets in the year, with the latter in particular providing an attractive product mix. Margin for the Europe segment are expected to improve the market recovery. Turkey international operating profit decreased by $300,000 with the segment impacted by weak Turkish economy. And finally, central cost increased due to one off conservative costs related to the appraisal of premium panel strategies.

Speaker 1

Moving to cash flow statement, we can see that both cash flow from operations and free cash flow are down compared to the prior year. EBITDA year on year grew by 2,300,000.0. However, this was offset by the cash and wind of provision for one off restructuring costs and investments in working capital. A significant working capital investment in the year within inventories as a group investor ensure that it is able to continue to be well placed with one to market demand and maintain best in class delivery performance. There was also a reduction in trade payables following a chain of steel supplier in Italy.

Speaker 1

Despite the reduction in free cash flow, there's still been a reduction in net debt And leverage based on net debt before lease liabilities is 1.37 times EBITDA, which is 0.1 times improvement on December 23, with leverage benefited from strong population growth. On this slide, we focus on other key financial areas. The taxation, as noted earlier, the effective tax rate has increased year on year to 29.4% with the one off credit in 2023 reducing the comparative charge. With dividends, as mentioned in the overview, we reiterate the final and therefore total dividend for 2024 increased by 2%. Return of capital employed led by strong adjusted operating profit performance, return of capital employed is decreased by 1.6 percentage points to 27.1%.

Speaker 1

The measure has also benefited from a reduction in the GBP value of euro assets due to the strengthening of the pound. And finally, we highlight that our two group credit facilities, which totaled £100,000,000 remaining placed until November 26. Our relationship with our banking partners remains strong and the 12/31/2024, the group had generated headroom on both facilities and available cash. And finally, my last slide provides technical guidance for use in analyst modeling. We expect the market environment to remain subdued for at least the first half of twenty twenty five.

Speaker 1

Here, input prices expect to remain stable during 2025. The group will be making a one off periodic investment in its IT infrastructure during 2025, which will give a modest increase in capital expenditure compared to 2024. During quarter four of 'twenty four, the group undertook a proactive price of realignment exercise on its core range of contract products in The UK with equal reduction to both list prices and rebates. The price realignment is a commercial initiative designed to making the price point of our contract products more competitive and also strengthening customer relationships. During 2025, because of the reduction of rebates, there will be a consequential increase in working capital.

Speaker 1

Leverage based on net debt for these liabilities is expected to fall during the year after a seasonal increase to the half year. And finally, the group's tax rate is expected to exceed 30% due to a 5% increase in the withholding tax rate payable and dividend from Turkey. Thank you. Now I'll hand you back over to Trevor, who will provide the business review.

Operator

Thanks, Lee. By way of a reminder, we are Europe's market leading rate of manufacturer. According to the latest available 2023 market share data, we held the number one position in both the hydronic heat emitter market overall and the steel panel rate market in particular, with shares of 11.820.2%, respectively. We serve over 500 customers across 40 countries, have a clear strategic focus on 10 core European markets and operate five strong brands: Stelrad, Penrad, Hudovad, Thermo Technic and DL Raiders. Stelrad operates in three geographic territories.

Operator

The UK and Ireland represents 47% of total group revenue, Europe represents 48%, while Turkey and international represents 5%. As we outlined at our Capital Markets event in November, the two key structural growth drivers of increasing premiumization and the drive for decarbonization will improve our product mix and margin and enable above market growth. And we have three competitive advantages that put us in prime position to take advantage of these market opportunities, namely the flexibility of our low cost manufacturing facilities and processes, our leading levels of customer service and product availability and finally, our market leading competitive position. Four, clear, consistent strategic objectives continue to provide focus and direction: growing market share, improving product mix, optimizing routes to market and positioning effectively for decarbonization. Taken together, the group's market opportunity, structural growth drivers and competitive advantages underpinned by robust strategy translate into a set of ambitious medium term targets, which deliver clear stakeholder value an increase in contribution per annum an operating margin of 13% cash conversion of more than 90% and a return on capital employed of over 30%.

Operator

And these medium term targets exclude the benefits of an underlying market recovery for which Telrad is very well positioned. To deliver on the structural growth drivers of increasing premiumization and the drive for decarbonization, we have a focused three point strategy. To capitalize on the opportunities presented by increasing premiumization in The UK market, we're leveraging Stell Rod's traditional trade strengths with key initiatives to Maximize the benefits of our brand positions Ensure that installers and merchant staff are supported in upselling to higher value products And through installer oriented marketing activities to remove any perceived barriers to recommending design raters to homeowners. In 2025, we'll boost Stellrad's consumer appeal by the further development of our stellrad.com e commerce platform, supported by refocused investment in targeted consumer marketing. We continue to evaluate opportunities to develop channel partnerships for design raters where these are in the best long term interests of the group.

Operator

In the drive for decarbonization, our strategic focus is on developing our product range and optimizing our routes to market. As you will see later on, we have been successful in promoting high output conventional raters, which represent the most practical and cost effective solution in lower temperature heating systems. And we're continuing to extend our portfolio of multi panel, multi convector products. For heat pump systems operating at very low system temperatures, we're innovating to introduce new hybrid radar ranges which combine a traditional hydronic heat emitter with forced electrical convection to increase the heat output. In 2024, we launched one such product range into our German market in cooperation with a leading heat source and system provider, a long established customer of Rettors SPA.

Operator

This low temperature Rettors has been well received by the market. Lastly, through the acquisition of Raters SPA, Stellrad gained access to a comprehensive portfolio of electric raters, which were not previously commercialized outside of Italy, France and Germany. We're now able to leverage our lead market position, trusted brands, access to market channels and long standing specifier and customer relationships to introduce a focused electrical offer into our other core markets. The Electric series in The UK market is a notable example and from a standing start, we are now building a meaningful project pipeline. I'd now like to give you some concrete examples of our progress in 2024 towards improving product mix and positioning effectively for decarbonization.

Operator

In terms of product mix improvement driven by increasing premiumization, Telrad's premium steel panel mix represented 5.7% of the group's volume in total. As a percentage of all steel panel volume, Premium Steel Panel reached a record mix of 6.3% in 2024. This was an increase of 0.1 points versus 2023. And despite challenged macroeconomic conditions, has now exceeded the levels seen during the post COVID renovation peak in 2020 and 2021. Indeed, since 2015, our premium steel panel volume has grown at 3.4% per annum, whilst sales of standard steel panels have fallen by CAGR of 2.6% over the same period.

Operator

It's extremely pleasing to see the underlying underdeveloped UK market as the key driver of this improvement. UK premium steel panel mix rising from 2.9% in 2023 to 3.1% in 2024. As those of you who attended our Capital Markets event may remember, The UK market represents a significant opportunity for StelroD. In eight of our 10 core markets, Premium Steel Panel has between 526% penetration of the total steel panel rater market. In comparison, The UK is underpenetrated in premium panel raters, where Stellrad has sustainable competitive advantage and profitability levels are high.

Operator

Guided by our recent work with strategic consultants, Eden McCallum, we continue to leverage our leading market position and number one brand to maximize this proper opportunity through both traditional and emerging routes to market. We're making good progress in developing sales of higher heat output conventional raters. Following changes to Part L of The UK building regulations, Stellrad has worked closely with specifiers and heating system designers, particularly in the new build sector, to find practical, cost effective solutions capable of meeting the demands of lower temperature heating systems. As a result, in 2024, we saw significant growth in The UK sales of our higher value, higher heat output vertical K3 and 900 millimeters high radars. Volume increased by 66% over the prior year, which was in turn 34% higher than in 2022.

Operator

This contributed to a 6.4% overall increase in Starad UK's average heat output per annum sold relative to 2023 levels. We are also making good progress on ASG, driven by our strategic sustainability framework Fit for the Future. Our number one priority is to keep our employees and contractors safe, and we aim for zero harm across our operations. In 2024, our continued focus on safety standards resulted in us setting a new benchmark for lost time instance with lost time frequency rate falling by 45.45% to 4.75. Environmental Product Declarations, EPDs, provide transparent, verified information on the environmental impact of a product and we are increasingly being requested by specifiers.

Operator

This is particularly the case in Scandinavian markets. And in 2024, Stelrad published targeted EPDs for core ranges to ensure ongoing specifications in Denmark and Sweden. We'll be publishing further APDs during 2025, notably for our UK Green Series, which is manufactured with low carbon steel. Another credible achievement in 2024 was achieving UK Certification for Sending Zero Waste to Landfill. While we are also proud to support the United Nations Global Compact initiative and in 2024, we committed to align our business with the 10 universally accepted principles in the areas of human rights, labour, environment and anti corruption, and to act in support of sustainable development goals.

Operator

So turning to the summary and outlook. Stellrad performed strongly in 2024 and the group remains well positioned for sustainable, profitable growth in the future. In challenging market conditions last year, we put in a robust performance, driving margin improvement through our total commitment to operational excellence. For the seventh year running, we delivered an increase in our contribution per raider, having set a new benchmark for premium steel panel raider mix and having seen significant growth in our high output conventional rate as in The UK market. Although we don't expect the current challenging market conditions to improve for at least the first half of twenty twenty five, Stellrad is very competitively positioned for 2025 and beyond.

Operator

With three sustainable competitive advantages of flexible low cost manufacturing, leading levels of product availability and a position of scale as the European market leader in hydro and heat emitters, we believe that our considerable experience of successfully steering the business through other challenging market cycles will enable the group to navigate the current conditions and deliver another year of progress. As we outlined at our November Capital Markets event, long term trends for the group are favorable. We have an attractive market opportunity with positive underlying dynamics in the hydronic heat metal market and a significant installed base ready for a replacement cycle that we expect to come through in the medium term. In premiumization and decarbonization, we have two structural drivers that will enable above market growth through product mix and margin gains. Our resilient business model, clear, consistent and robust strategy and market leadership position underpin these opportunities and will enable Stellat's proper growth over the coming years.

Operator

With that, we'll move over to questions.

Speaker 2

Thank you, Mr. Harvey. You. The first question comes from the line of Ainsley Lamin from Investec. Please go ahead.

Speaker 3

Hi. Good morning, Trevor. Good morning, Lee. Good morning. I think I've got two questions.

Speaker 3

Firstly, just obviously this year, I'd like to see much volume growth. So just wondering, when you look at the kind of price management and cost management, are you confident if we assume that volumes are flat across the group that you could at least hold the contribution per radiator? So I guess a bit more cover around pricing and cost. And then the second question, just in The UK, if you could remind us again your exposure to newbuild and RM and I. And are you seeing any kind of pick up or better confidence among the new housebuilders?

Speaker 3

And maybe a bit more color on the RM and I market as well? Thanks very much.

Operator

I'll answer that, Lee.

Speaker 1

Okay.

Operator

I think the first part of the question was about contribution to rate at Ainslie. And you comment, do we see any further upside or are we confident of maintaining it? I think at this early stage, despite market uncertainty, I think we'll have a high degree of confidence that we can at least maintain the current contribution per ad at the record level that we've achieved in 2024. But we have set out some slightly more ambitious targets at the CME event for the medium term, and that was to exceed GBP 21 per In terms of the current market conditions, I would agree with you, Ainsley, that the commentary coming up with newbuild is certainly a little bit more positive than it has been for the last eighteen to twenty four months. However, Stelrad, at this stage, hasn't seen any benefit from that.

Operator

But, of course, the heating system is one of the last elements installed into a new home. So it'll likely be probably five or six months before we see the benefits of any increased new build activity at the beginning of the year. Does that answer your question, Ainsley?

Speaker 3

Yes. Anything on the RMI market? Any more color in The UK? I

Operator

mean, RMI has been struggling somewhat because of poor consumer confidence. And although there is some early signs of some consumer confidence recovering, it's not significant enough to feed through into increased RMI activity.

Speaker 1

Just to remind you, Ainsley, in The UK, new build is about 25% of our UK volume, the remainder is RMI commercial.

Speaker 3

That's great. That's helpful. Thanks very much.

Operator

Thanks, Andrew.

Speaker 2

The next question comes from the line of Andrea Collins from Davy. Please go ahead.

Speaker 4

Good morning, Trevor. Good morning, Lee. Congrats on the results this morning. I guess I have two questions if that's okay. The first one is just in relation to the premium panel radiators.

Speaker 4

You mentioned there's kind of further growth in penetration rate in 2024. So I guess I'm wondering what are your expectations for this side of the business in 2025? And I guess you kind of alluded to those key initiatives you have in place now to assist premium panel growth in The U. K. When do you think we'll start to see an impact from these?

Speaker 4

Or is it still too early to kind of see an impact there? And then my second question is on countries related, but I can come back to that if that's easier.

Operator

Do you want to answer that, Lee?

Speaker 1

Yes. I mean, in terms of the kind of premium panel mix is very different per geography. So in terms of the kind of the actual growth in that kind of mix this year at 5.7%, I guess, depends on what happens where. For example, Germany, which is a market where we're struggling in recent years, the percentage of penetration there is around 20%. So where it goes in the immediate future depends on kind of the wider kind of economic recovery.

Speaker 1

But as you alluded to, the significant challenge for us is growing that, UK percentage. And whilst the the growth was modest from, I think, 2.9 to 3.1% during '24 for our largest market. That's a significant change in what we're looking to focus on. So and that feeds into the kind of premium panel strategies, implementing those that EMK kind of strategic work stream. And I think in terms of timeline, there's obviously investment to not too much a cash investment, more of a process investment to ensure that the website, which is the first main lever, is ready for is fit for purpose in terms of pushing that kind of consumer sales.

Speaker 1

And we're looking to get that online by the kind of quarter three, I think. So in terms of back end of this year, we'd love to get some more traction on that moving into 2026.

Speaker 4

Perfect. That makes sense. And then the second one is just on the contribution per radiator. I guess, could you give any more color on how this grew across the different product types, so standard versus premium versus design? And is there any kind of color on different geographies as well?

Speaker 1

I think the it is mainly by product type. When you look at contribution per radiator across different geographies, it varies, but mainly because of the product mix. And it is still that kind of what we always say that on average is about 20. But if you're looking at standard panel versus a premium, you're talking five times, six times the contribution. So that kind of upscale benefit from moving from the standard to a premium is to get more or less five, six times contribution.

Speaker 1

And it's similar kind of not as high, but kind of similar uptick on other products like the column rads and electric. There's that significant uptick in contribution per radiator.

Speaker 4

Perfect. That's great. Thank you.

Speaker 1

Thank you.

Speaker 2

The next question comes from the line of Sam Callan from Peel Hunt. Please go ahead. Hi, Al. I've got three.

Speaker 5

I think they should be pretty brief though. The first one is, in terms of doing the strategy piece, you mentioned kind of support for installers and merchants. What kind of support do do they need? Is it is it more training around the product? It's kind of more marketing materials to help with the upselling?

Speaker 5

I'm assuming it's not gonna showrooms that that they need. So just interested to explore that. The second one is around, slide 20 and the increase in higher output radiators. Can you give any commentary around what channel you're seeing that? Is it is it coming in the new gold sector or or the ROI sector?

Speaker 5

And then the last one, and I probably should know the answer to this, but the hybrid and the electric ranges, you you said you're designing them. Are you manufacturing, though, as well? And if you're not, would would you see two?

Operator

I'll answer those three, Lee. Thanks for the question, Sam. I think the first one in terms of merchant installer support, Lee McCollum research highlighted the need to have some more focused market activity to reduce certain misconceptions about the complexity of installing premium and design products. And we have instigated a training program and a targeted modern campaign towards installers to get the message across in terms of how easy these products are to install and how cost competitive they are. In terms of your question on terms of high slide 20 high output conventional rate is, we recognize the growing popularity of low temperature systems driven primarily on the back of the build regulations changes of Part L.

Operator

We have been very active with all sorts of specifiers both across new build social housing. And we have seen those specifications come through and significant increased demand for those high output products specifically targeted at low temperature heating systems? And your last question was about the German initiative that RETA SPA had with one of their main customers for Germany. That is a product which I'm pleased to report, Sam, is manufactured in

Speaker 5

house. Great. Thank you.

Speaker 2

The next question comes from the line of Edward Prest from Berenberg. Please go ahead.

Speaker 6

Hello. Morning, Trevor. Morning, Lee. I've got two, please. Firstly, in relation to sales channels, do you have any sense of how much stock is currently being held in merchandising and retail channels and how this is relative to a normal level?

Speaker 6

And secondly, back to contribution per radiator, obviously, increasing for seven consecutive years, As and when The U. K. Recovers, given it's the relatively lower share of premium compared to other markets, would a U. K. Is it reasonable to think a U.

Speaker 6

K. Recovery might lead to a decrease in the contribution per radiator? Or it's actually sort of in line with the broader group average? Thanks.

Operator

You want to answer those for Lee?

Speaker 1

Yes. I mean, in terms of The UK stock channel, I'm not having much visibility in the European stock channel. But in UK, we get the information year on year and there's been no significant change in terms of the level of stock in the channel. I think stock is critical to kind of the availability of radiators and the ability for that distribution to work. So we've not seen any movement in that.

Speaker 1

In terms of contribution per radiator, yes, there is a kind of a mixed element across the group. And in terms of if The UK was to recover significantly faster than Europe, there could be a change in contribution per radiator. That said, European economies have been equally suppressed in recent years and furthermore, the development of The UK market, we'd hope to kind of push that premium trend in line with that development. So we're optimistic on that basis that we'd be able to sustain and not grow the contribution per radiator.

Speaker 6

Okay, brilliant. Thank you.

Speaker 2

There are no further questions from the phone line. So handing over to Rosie to take questions from the webcast.

Speaker 7

Thank you. We have one question from Charlie Campbell of Stifel. Can you explain the increase in inventories given the subdued outlook? Is there a mix shift here?

Speaker 1

There's no mix shift to speak of. I think we've spoken about sustainable competitive advantages and product availability and customer service is key to that. What we've realized kind of in recent years is that the ability to supply our customers with the right products at the right time is just a significant advantage and what we're keen to take advantage to make sure we make the most of. And that's the only kind of development there.

Speaker 7

Thank you. Our next question is from James Wood at Canaccord. Is on time in full delivery of Europe a trackable KPI? And if so, what are the trends for this region?

Operator

I'll answer that one. We've been tracking our own time in full for over ten years. But interestingly, it was only last year during one of these events that we have an investor actually inquire about on time in full. And he identified that it was a key measure that he was particularly interested in. So you will have noticed at the couple of markets event in November, we made a point of measuring on time in full for The UK marketplace.

Operator

We make we made comment on on time in full for The UK in this particular presentation. It's a measure that is very important in The UK given the structure of The UK marketplace. And we have seen merchants adjust their stock levels down slightly because the reliability of their supplies from Stalrad are so good. So yes, we have a long history of measuring on time in full, but it's only relevant for The UK marketplace, which is 47% of our revenues.

Speaker 7

Thank you, Trevor. There appears to be no further questions on the webcast. That concludes today's presentation. Thank you, everyone, for joining.

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Earnings Conference Call
Stelrad Group H2 2024
00:00 / 00:00