Stelrad 2025 trading update: profits inch higher, margins sharpen
Stelrad Group has posted another year of adjusted operating profit growth despite softer demand in its core UK and European markets. Revenue came in at c.£280m, with volumes down 4% year-on-year, but a stronger second half helped steady the ship.
The real headline is margin. Contribution per radiator improved for the eighth consecutive year, backed by a better product mix and tight cost control. That pushed adjusted operating profit up c.3% to c.£32.5m (FY24: £31.5m) and lifted the adjusted operating margin to 11.6% (FY24: 10.8%).
Key numbers from Stelrad’s 2025 trading update
| Metric | FY2025 (c.) | FY2024 | Comment |
|---|---|---|---|
| Revenue | £280m | Not disclosed | Small H2 volume improvement vs H1; overall volumes -4% year-on-year |
| Adjusted operating profit | £32.5m | £31.5m | c.3% growth, in line with market expectations |
| Adjusted operating margin | 11.6% | 10.8% | Margin expansion despite lower volumes |
| Volumes | -4% year-on-year | — | Encouraging progress in several key markets |
| Contribution per radiator | Improved | Improved | 8th consecutive year of improvement (no numeric disclosed) |
| Net debt (pre-lease) | £51.2m | £59.7m | Further deleveraging through strong cash management |
| Leverage ratio | 1.16x | 1.37x | Balance sheet strengthened |
| Loan facility | £100m renewed | — | Renewed in December 2025; expected to lower borrowing costs |
| Exceptional items (H2) | £2.7m | Not disclosed | Danish restructuring; follows earlier Turkish restructuring |
Margins up: why contribution per radiator matters
Stelrad is squeezing more profit out of each unit sold, even as volumes soften. The contribution per radiator KPI – essentially the profit contribution after variable costs per product – improved again thanks to a richer product mix and factory efficiencies. That is textbook margin management during a downturn.
Adjusted operating profit – profit from core operations excluding one-off items – rose to c.£32.5m. With an 11.6% margin, Stelrad is proving it can defend profitability in a challenging housing and renovations market.
Quick jargon buster
- Adjusted operating profit: operating profit excluding exceptional or non-underlying items.
- Contribution per radiator: profit contribution after variable costs on each radiator sold.
- Leverage ratio: net debt relative to a profit measure, indicating balance sheet risk. Lower is safer.
- RMI: repair, maintenance and improvement – the renovations market.
Volumes and revenue: end markets still muted
Overall volumes fell 4% year-on-year, though the second half ticked up versus the first. Revenue was c.£280m, but Stelrad did not disclose a prior-year revenue number. The tone remains cautious: both RMI and new build activity are still subdued across the UK and Europe.
The company did flag “encouraging progress” in a number of key markets. Without detail by country or segment, we cannot gauge the scale, but it supports the story that mix and share gains are helping blunt volume pressure.
Debt down and funding costs to ease
Stelrad’s cash discipline is visible in the numbers. Net debt before lease liabilities dropped to £51.2m from £59.7m, and the leverage ratio improved to 1.16x from 1.37x. That gives management more strategic flexibility.
Importantly, the £100m loan facility was renewed in December 2025 and is expected to reduce future borrowing costs. Lower interest outgoings should support earnings resilience into 2026.
Restructuring: short-term charge, long-term margin benefit
Following earlier changes in Turkey, Stelrad restructured its Danish business before year-end, booking an exceptional expense of c.£2.7m in H2 2025. Management says this will enhance future operational margins. These actions fit the wider theme: take costs out, streamline the footprint, protect margins.
The balance to watch is execution risk versus savings delivery. The upfront charge is clear; the timetable and quantum of the ongoing benefit are not disclosed.
Outlook for 2026: platform is solid, timing of recovery unclear
The Board is candid that market recovery timing is uncertain, with both RMI and new build likely to stay soft near term. Against that, the margin work done in 2025, plus Stelrad’s strategic growth drivers, gives a “robust platform” for further progress in 2026.
Stelrad highlights structural growth drivers towards higher-margin, higher added value products. As a reminder of its market heft, the Group is market leader by volume in the combined UK, European and Turkish steel panel radiator market with a 19.3% share, and excluding Russia held a 24.2% share in 2024. It leads in six countries and holds top-three positions in a further 12 – a useful moat while the cycle is weak.
Full-year results are scheduled for 13 March 2026.
My take: disciplined execution beats the cycle
Positives
- Margin resilience: 11.6% adjusted operating margin despite volumes -4% year-on-year.
- Cash and balance sheet: net debt down to £51.2m; leverage down to 1.16x.
- Cheaper funding: £100m facility renewal should trim interest costs.
- Operational traction: contribution per radiator up for the eighth year running.
- Scale advantage: leading market positions across Europe provide pricing and mix optionality.
Watch-fors
- Top-line momentum: revenue growth versus FY24 not disclosed; demand still subdued.
- Restructuring delivery: c.£2.7m exceptional charge in H2 2025; benefits not quantified.
- Macro sensitivity: recovery in RMI and new build remains the swing factor for volumes.
Bottom line
This is a tidy trading update from Stelrad: modest profit growth, fatter margins, and less debt in a tough market. Management continues to pull the right levers on mix and costs while keeping the balance sheet on a short leash.
The near-term outlook for volumes is still cloudy, but Stelrad’s execution and market position give it resilience. If and when RMI and new build activity pick up, the operational gearing could make for an attractive snap-back. For now, this reads as steady, well-managed progress in line with expectations.
