Stelrad Group Reports 2025 Results: Adjusted Operating Profit Up 3% Despite Revenue Decline

Stelrad 2025 results: profit resilience, cash strength, dividend nudged higher

Stelrad Group has posted a tidy bit of resilience in a tough market. Revenue dipped 3.8% to £279.6 million, but adjusted operating profit edged up 3.0% to £32.5 million thanks to firm margin management and a richer product mix. Statutory profit was hit by £14.9 million of exceptional charges tied to its Italian unit, Radiators SpA, and restructuring in Turkey and Denmark, leaving reported profit for the year at £0.8 million.

Crucially, cash generation was strong and leverage fell again. Free cash flow more than doubled to £20.5 million and net debt before leases dropped to £51.2 million, taking leverage to 1.16x. The Board has lifted the total dividend 3.9% to 8.09 pence, with a recommended final of 5.05 pence.

Key numbers investors should know

Metric	2025	2024	Movement
Revenue	£279.6m	£290.6m	-3.8%
Adjusted operating profit	£32.5m	£31.5m	+3.0%
Operating profit (statutory)	£17.5m	£31.4m	-44.3%
Exceptional items	£14.9m	£0.0m	n/a
Profit for the year (statutory)	£0.8m	£16.5m	-94.9%
Adjusted profit for the year	£16.7m	£16.6m	+0.2%
Adjusted EPS (basic)	13.08p	13.05p	+0.03p
Free cash flow	£20.5m	£9.6m	+114.6%
ROCE (return on capital employed)	30.1%	27.1%	+3.0 ppts
Net debt before leases	£51.2m	£59.7m	-14.3%
Leverage (ND/EBITDA before leases)	1.16x	1.37x	Improved
Total dividend per share	8.09p	7.79p	+3.9%

Adjusted figures remove exceptional items and the amortisation of customer relationships to show underlying performance.

What drove the numbers: mix, margins and a flexible footprint

Volumes were down about 4%, but Stelrad squeezed more value out of every unit. Contribution per radiator rose for the eighth straight year to £20.50 (2024: £20.15) as the Group pushed higher-spec products and kept a tight grip on costs. On Time In Full (OTIF) delivery in the UK held at an excellent 98%, a sign the operations are humming despite the macro backdrop.

Revenue by region: UK & Ireland soft, Europe muted, Turkey improving

• UK & Ireland: revenue £131.3 million, down 4.4%, with volumes off 6.9% but supported by a 1.5% uplift in average radiator heat output.
• Europe: revenue £133.5 million, down 3.9%, mainly due to a weak French DIY market in Q4.
• Turkey & International: revenue £14.8 million, up 3.9% as market conditions improved.

Profitability mirrored that mix: adjusted operating profit in the UK & Ireland inched up to £30.0 million, Europe slipped to £7.3 million on fixed-cost drag, and Turkey & International improved to £1.2 million. Central costs fell to £6.0 million.

Exceptional items and Radiators SpA: the clean-up and why it matters

The £14.9 million exceptional charge was largely non-cash (£12.6 million) and centred on Radiators SpA in Italy. It included impairments to goodwill (£2.7 million), customer relationships (£1.4 million), property, plant and equipment (£5.8 million) and an inventory provision (£2.3 million). Cash restructuring costs across Turkey, Italy and Denmark were £2.3 million within a total £2.7 million restructuring charge.

The headline commercial decision: Stelrad exited a loss-making steel panel contract at Radiators SpA at the end of 2025. That will trim some revenue, but it is already proving margin-accretive in early 2026 and should let management refocus Radiators SpA on its electrical and designer ranges. In short, lower pain now for cleaner, higher-quality earnings later.

Cash, debt and dividends: the balance sheet is doing the heavy lifting

Free cash flow jumped to £20.5 million, helped by better working capital discipline, lower capex and reduced interest paid. Cash at year-end was £19.0 million, undrawn facilities stood at £30.6 million, and leverage improved to 1.16x on a net debt before leases of £51.2 million.

The £100 million loan facility was renewed in December 2025 with long-standing banking partners, lowering future borrowing margins and running to December 2028 with a two-year extension option. Net finance costs fell to £7.4 million (2024: £8.0 million).

Despite statutory earnings being suppressed by one-offs, the dividend keeps progressing: total 2025 payout of 8.09 pence, including a recommended final dividend of 5.05 pence, payable on 26 May 2026 to shareholders on the register on 24 April 2026, subject to approval.

Premiumisation and decarbonisation: structural tailwinds still blowing

Premium panel radiators reached a record 6.4% of total steel panel volume. In the UK, Stelrad’s push into high-output conventional radiators, hybrids and electric options has delivered 33% annual growth in these ranges since 2022. Average heat output per UK radiator sold rose another 1.5%, helped by Part L building regulation changes nudging systems toward lower temperatures and bigger emitters.

This is exactly where Stelrad wants to be positioned: higher-margin products and a portfolio tailored to decarbonising heating systems. Market leadership in six of ten core territories gives it the distribution and brand strength to keep nudging mix up as demand recovers.

2026 outlook: subdued demand first, self-help continues

Trading early in the new year is in line with expectations. End markets are stable but subdued, and management expects that to persist at least through H1 2026. While the timing of a broader recovery is uncertain, Stelrad sees further progress this year through ongoing operational initiatives and its entrenched market positions.

What I’m watching next

• Execution benefits from the Radiators SpA clean-up – full-year 2026 margin impact from the contract exit and restructurings.
• Mix progression – premium steel panel share beyond 6.4% and continued growth in high-output, hybrid and electric ranges.
• Volume stabilisation – any inflection in UK RMI/new build and the French DIY channel after a weak Q4.
• Cash conversion – can free cash flow stay above £20 million as capex normalises and the UK becomes cash tax paying.
• Tax rate pressure – adjusted effective tax rate rose to 34.4% due to Turkey withholding tax and profit mix.
• Leverage and interest – benefit from the lower-margin loan facility as rates drift down.

My take for retail investors

On the positive side, Stelrad did the hard yards: grew adjusted profit with falling revenue, protected service levels, improved ROCE to 30.1% and generated strong free cash. The dividend is up again and leverage is comfortably low. The strategic pivot at Radiators SpA is sensible and already helping margins.

On the negative side, statutory profit took a thump and volumes remain weak in core markets, particularly Europe late in the year. The European segment still carries fixed-cost sensitivity and the tax take has nudged higher.

Net-net, this reads like a business using its scale and operational discipline to grind out progress through the cycle. If volumes recover, Stelrad’s rising contribution per radiator and leaner cost base should provide healthy operating leverage. Until then, cash discipline and mix improvement are doing the heavy lifting – and that’s not a bad place to be.