Eurocell plc Trading Update - In Line with Expectations (0247H)
25 Julio 2023 - 1:00AM
UK Regulatory
TIDMECEL
RNS Number : 0247H
Eurocell plc
25 July 2023
25 July 2023
EUROCELL PLC
("Eurocell" or the "Group")
Trading Update - In Line with Expectations
Eurocell plc, the market leading, vertically integrated UK
manufacturer, recycler and distributor of innovative window, door
and roofline PVC products, provides the following update for the
six months ended 30 June 2023.
First Half Trading Performance
Against a challenging backdrop and an exceptionally strong 2022
comparative period, we have delivered some resilience in the
Group's sales performance for the first half.
Reported Group sales for the six months to 30 June 2023 were
GBP184 million, down 2% on H1 2022, with volume 6% lower.
Comparisons by division were as follows:
Sales to 30 June 2023 vs 2022
Total Group -2%
Profiles Division -1%
Building Plastics Division -3%
--------
Profiles - reduced repair, maintenance and improvement (RMI)
activity and a weaker new build market resulted in lower sales
volumes, partially offset by the benefit of recent market share
gains. We have continued to acquire new fabricator accounts, and
our pipeline of potential new fabricator customers remains
positive, further supported by a net reduction in UK capacity
following the recent announcement by UK Windows & Doors Group
that it intends to shut its Duraflex extrusion business in
September.
Building Plastics - RMI volumes in the branch network remain
steady but subdued, with increased competition for limited demand
leading to some pressure on margins.
We have experienced persistent input cost inflation,
particularly for labour and electricity (where we operate a rolling
12-month forward hedging policy), but we continue to offset this
with selling price increases.
PVC resin prices fell back slightly, and whilst we anticipate
some easing of input cost pricing in H2, recycling feedstock prices
remain significantly higher than the comparative period in
2022.
Outlook and Seasonality
The latest Construction Product Association (CPA) forecasts
published earlier this week predict greater declines for 2023 in
the RMI market of 11% and new build market of 19% (previously 9%
and 17% respectively), before both markets begin to recover in
2024.
As demand has softened, we have acted to lower our cost base. We
completed a restructuring programme in Q4 2022, which has reduced
operating costs by c.GBP5 million per annum from the start of 2023.
With end markets again weakening in H1, and given the more
challenging outlook for the remainder of the year, we have recently
completed a further headcount reduction, which will lower operating
costs by another c.GBP2 million in H2 and by c.GBP4 million per
annum thereafter. A charge of c.GBP2 million will be included as a
non-underlying item in the first half financial statements for the
related redundancy costs. In addition, we continue to seek
operational efficiencies, for profit improvement, the benefits of
which we should begin to see next year.
Last year, in a change to historical seasonal patterns, sales
volume and profit generation was weighted towards H1. This
reflected strong demand in the RMI market in the first half,
followed by a slowdown in smaller discretionary RMI work in H2. As
previously highlighted, for 2023 we anticipate a heavy weighting
towards H2, with sales returning to a more normal seasonality and
profits in the second half benefiting from lower input prices
(including raw materials and hedged electricity) and operational
cost savings already implemented.
Taking the above factors into account, our expectations for the
full year remain unchanged.
We enter the second half of the year with a strong balance
sheet. Net debt on a pre-IFRS 16 basis was GBP15 million at 30 June
2023 (31 December 2022: GBP14 million), including a net inflow from
working capital of c.GBP4m, driven by careful cash flow management
and reduced stocks.
Overall, we believe the actions we are taking leave the business
well placed to benefit from a recovery in our markets and will,
over the medium-term, drive sustainable growth in shareholder value
.
Half Year Results
We look forward to providing a full update when we announce our
half year results for the six months ending 30 June 2023 on 5
September 2023.
Enquiries:
Eurocell plc
Darren Waters, Chief Executive Officer +44 (0) 1773 842 105
Michael Scott, Chief Financial Officer +44 (0) 1773 842 140
Teneo
Nick de Bunsen +44 (0) 7825 575 258
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END
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