REG - Eurocell plc - Year End Trading Update

EurocellAnnouncement

26/01/2023 07:00

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RNS Number : 8923N  Eurocell plc  26 January 2023

26 January 2023

EUROCELL PLC

("Eurocell" or the "Group")

Year End Trading Update

 

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 for the year ended 31 December 2022.

 

Trading Performance

Group sales for the year ended 31 December 2022 were £384 million, up 12%
compared to 2021. Divisional growth rates were as follows:

 

 Sales growth vs 2021        6 months to 30 June 2022  6 months to 31 Dec 2022  12 months to 31 Dec 2022
 Total Group                 13%                       11%                      12%
 Profiles Division           17%                       13%                      15%
 Building Plastics Division  11%                       9%                       10%

 

Following a strong first six months of the year, new build, large contract and
RMI project work continued to be robust throughout the second half of 2022.
This was offset by the impact of the previously reported cyber incident and a
slowdown in smaller discretionary RMI work experienced by our branch network
and trade fabricators in H2, albeit against an exceptionally strong
comparative period. After a period of very strong demand, we believe the
market is now returning to pre-pandemic norms.

 

Price was the driver of sales growth in 2022. Whilst we continue to offset
input cost inflation with selling price increases and surcharges, we
experienced margin pressure in the second half, reflecting a lag on
implementing some selling price increases. However, the cost of key raw
materials does now appear to be stabilising, and in some cases beginning to
fall.

 

Cyber Insurance Claim

As reported at the Half Year, we experienced a cyber incident towards the end
of July, which resulted in some temporary disruption. The incident was
efficiently resolved, with the business remaining operational throughout and
trading normally from mid-August. We have now partially resolved our cyber
insurance claim and expect to recognise compensation in excess of £1 million
as an underlying item in our 2022 financial statements, primarily for business
interruption. Work is ongoing with the insurer to resolve the remaining
aspects of the claim.

 

Disposal of Security Hardware

To further streamline our business, in December 2022 we sold the trade and
assets of Security Hardware, a supplier of window locks, hardware and spares
to the RMI market with annual third-party sales of c.£3 million, to UAP
Limited, a UK-based door hardware supplier. Going forward, UAP will supply
hardware to all our branches.

 

As a result of the sale, we expect to report an overall loss from discontinued
operations in the 2022 financial statements of c.£2 million. This
incorporates a trading loss for the period of c.£1 million (inclusive of
costs incurred to prepare the business for sale), as well as the sale proceeds
and associated asset impairments.

 

2022 Financial Results

Reflecting the factors described above, we expect underlying profit before tax
from continuing operations for the year ended 31 December 2022 to be in line
with market expectations, with the trading loss at Security Hardware of c.£1
million separately classified within discontinued operations.

 

Outlook and Cost Saving Programme

We are mindful of the uncertain macro-economic background and its impact on
our markets. The Construction Product Association's latest forecast, published
in November 2022, predicts declines in both the RMI and new build markets of
9% for 2023, before recovering in 2024, and we have experienced some recent
weakness in those sectors.

 

In anticipation of weaker markets in 2023, we completed a restructuring
programme in Q4 2022, which along with other cost saving measures, will reduce
operating costs by approximately £5 million per annum from the start of 2023.
A charge of c.£2 million will be included as a non-underlying item in our
2022 financial statements in respect of the programme. We also intend to
temporarily pause our branch opening programme until the economic outlook is
clearer.

 

However, we continue to take market share and have increased the run rate on
new fabricator account acquisitions, with our pipeline of other potential new
fabricator customers remaining healthy. Market share gains are further
supported by the impact of maturing branches and a widening product range, all
underpinned by very high product availability and increasingly efficient
operations.

 

Our debt is low, our balance sheet is strong and we remain confident of
continuing to outperform our markets.

 

Notice of Results

We expect to publish our results for the year ending 31 December 2022 on 16
March 2023, at which time we will provide further guidance on the year ahead.

 

 

Enquiries:

 Eurocell plc
 Mark Kelly, Chief Executive Officer     +44 (0) 1773 842 105
 Michael Scott, Chief Financial Officer  +44 (0) 1773 842 140

 Teneo
 Ben Foster                              +44 (0) 777 624 0806
 Camilla Cunningham                      +44 (0) 746 498 2426

 

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