REG - Eurocell plc - Trading Update and Board Changes

EurocellAnnouncement

12/05/2023 07:00

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RNS Number : 1751Z  Eurocell plc  12 May 2023

12 May 2023

EUROCELL PLC

("Eurocell" or the "Group")

 

Trading Update and Board Changes

 

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 first four months of 2023.

 

Trading Performance

Group sales for the four months to 30 April 2023 were down 2% compared to a
very strong equivalent period in 2022. Comparisons by division were as
follows:

 

 Sales to 30 April 2023      vs 2022
 Total Group                 -2%
 Profiles Division           level
 Building Plastics Division  -3%

 

Whilst we have benefited from recent market share gains in Profiles, trading
volumes for the Group were nonetheless down 6% in the period, impacted by
weakness in both the repair, maintenance and improvement (RMI) and new build
markets as follows:

 •    Profiles - subdued RMI and fragile new build markets have resulted in lower
      sales volumes. However, we have continued to acquire new fabricator accounts,
      and our pipeline of potential new fabricator customers remains healthy.
 •    Building Plastics - RMI volume in the branch network is also subdued but
      remains steady.

We have continued to experience cost inflation, particularly for electricity
(where we operate a rolling 12-month forward hedging policy for the majority
of our requirements). PVC resin prices have fallen back slightly this year,
but remain volatile, and feedstock prices for our recycling plants remain
significantly higher than the comparative period in 2022.

 

We have continued to offset input cost inflation with selling price increases
and surcharges. However, lower volumes and resin prices are driving
increasingly competitive markets for our products, resulting in margin
pressure.

 

Outlook and Seasonality

The Construction Product Association's (CPA) latest forecast, published
earlier in May, reaffirmed a reduction in the RMI market of -9% for 2023
(unchanged from the January CPA update), but now predicts a further decline in
new build to -17% (previously -11%), before both markets recover in 2024.

 

As market volumes and oil prices retreat, we have acted quickly and are
capturing further cost savings. Also, driven by our increasingly efficient
operations, we have identified additional opportunities for cost reduction and
profit improvement.

 

Last year, in a change to historical seasonal patterns, sales volume and
profit generation was weighted towards H1. This reflected very strong demand
in the RMI market in the first half, followed by a slowdown in smaller
discretionary RMI work in H2. For 2023, we now anticipate a heavy weighting
towards H2, with sales returning to normal seasonality and profits in the
second half also benefiting from lower input prices (including hedged
electricity) and cost savings.

 

Taking the above factors into account, we now expect adjusted profit before
tax for 2023 to come in below current market expectations ((1)).

 

Our balance sheet is strong and the actions we have taken and plan to
implement will improve our efficiency and resilience, and position us well to
benefit when our end markets recover.

 

Board Changes

The following Board changes took place following the conclusion of yesterday's
AGM.

 

As previously announced, following an agreed handover period, Darren Waters
assumed the position of Chief Executive Officer and Mark Kelly retired. Also
as previously announced, Martyn Coffey stood down from the Board.

 

We are also delighted to announce that the Board appointed Will Truman as an
independent Non-executive Director, and member of the Nomination Committee.

 

Will brings strong commercial expertise, as well as a wealth of experience in
stakeholder management and M&A. He is currently engaged in a non-executive
advisory role at Imagesound Limited, having served as Chief Executive Officer
for 9 years up to April 2023, and as Chief Financial Officer for 7 years prior
to that. Previously, Will was an Associate Director in Transaction Services at
KPMG LLP and is a Fellow of the Institute of Chartered Accountants in England
and Wales.

 

Derek Mapp, Chair of the Board, said:

 

"I am delighted that Will is joining the Eurocell Board. He brings extensive
and complementary experience of delivering sustainable business growth, both
organically and through acquisition, and we are looking forward to working
with him."

 

This announcement is made pursuant to LR 9.6.11R(3) of the Listing Rules and
there are no further matters, required by paragraphs 9.6.13R (1) to (6) of the
Listing Rules, to be disclosed in relation to Will Truman.

 

This announcement contains inside information for the purposes of Article 7 of
EU Regulation 596/2014.

 

Notes:

(1)   Eurocell-calculated analyst consensus profit before tax forecast for
2023 of £22.0 million.

 

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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