REG - Eurocell plc - Year End Trading Update

EurocellAnnouncement

21/01/2022 07:05

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RNS Number : 1611Z  Eurocell plc  21 January 2022

21 January 2022

EUROCELL PLC

("Eurocell" or the "Group")

 

Year End Trading Update - Positive Finish to 2021, Strong Platform for 2022

 

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 year ended 31 December 2021.

 

Summary

The strong sales performance previously announced for the ten months to 31
October continued through to the end of the year, supported by good underlying
demand in our markets. We have taken effective action to mitigate ongoing cost
inflation and supply chain pressures. As a result, we now believe profit
before tax for the full year will be slightly ahead of current market
expectations((1)).

 

Trading Performance

Group sales for the six months to 31 December were up 23% compared to 2019 and
7% compared to 2020, with the latter reflecting a very strong second half in
that year. For the year ended 31 December 2021, sales were £343 million, up
23% compared to 2019 and 33% compared to 2020. Divisional growth rates were as
follows:

 

 Sales growth                6 months to 31 Dec 2021  12 months        6 months to 31 Dec 2021  12 months

to 31 Dec 2021
to 31 Dec 2021
                                                      vs 2019                                   vs
                                                                                                20
                                                                                                20
 Total Group                 23%                      23%              7%                       33%
 Profiles Division           24%                      22%              14%                      41%
 Building Plastics Division  21%                      24%              2%                       28%

 

Whilst demand in the repair, maintenance and improvement (RMI) market has
moderated from the unprecedented levels experienced in H2 2020 and H1 2021,
this sector remains strong and customer demand levels are good going into
2022. We believe we are also continuing to take market share.

 

Group sales growth for the year ended 31 December of 23% compared to 2019
includes:

·    Profiles up 22% - good contributions from trade fabricators, who are
substantially focused on the RMI market, and another very strong performance
from Vista doors. New build  enjoyed improved sales in the second half, as
the house builders focused on achieving year end completion targets

·    Building Plastics up 24% - good performance across our full range of
own-manufactured products and traded goods, including more than 150% growth in
outdoor living products, supported by a consistently strong order book. We
opened 12 new branches in the year, 4 of which are the new larger format,
taking the total estate to 219 sites

 

We have continued to secure the raw materials we require and we expect past
constraints to ease over the coming months. We have mitigated raw material
cost inflation with selling price increases and surcharges, with price
inflation becoming a larger component of sales growth as the year progressed.
We are also pleased to report that the actions we took in H2 2021 to secure
more labour have ensured that we have the staff necessary to operate
efficiently and support our growth aspirations.

 

Our market-leading recycling plants supported continuity of supply of resin in
tight markets, whilst continuing to improve the proportion of recycled
material used in our primary extrusion operations. These plants supplied 27%
of our raw material consumption for the year (2020: 25%), driving significant
cost and carbon savings compared to the use of virgin material.

 

Net debt at 31 December 2021 on a pre-IFRS 16 basis was c.£11 million (31
December 2020: £10 million), which includes the substantial impact of
inflation on the components of working capital.

 

New Warehouse and Manufacturing Capacity Expansion

As previously reported, fit-out of our new state-of-the-art warehouse is now
complete. As well as being central to increasing capacity, the facility is key
to delivering further improvements in operational efficiencies as the new
plant, systems and processes become embedded, and we are optimistic that
operating performance will exceed our original expectations.

 

The 2021 manufacturing capacity expansion, including 5 new extrusion lines,
together with the associated mixing plant upgrade and tooling, is also now
complete. We plan to add a further 5 lines in 2022. Together, these
investments increase extrusion capacity by more than 15%, thereby enabling
future sales and market share growth.

 

Notice of Results

As previously announced, we expect to publish our results for the year ended
31 December 2021 on 18 March 2022.

 

 

Notes

(1)   Eurocell calculated analyst consensus profit before tax forecast for
2021 of £26.5 million.

 

Enquiries:

 Mark Kelly, Chief Executive Officer     +44 (0) 1773 842 105
 Michael Scott, Chief Financial Officer  +44 (0) 1773 842 140
 Ben Foster (Teneo)                      +44 (0) 777 624 0806

 

END

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