Trading Update
16/05/2024 07:00
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RNS Number : 6256O Eurocell plc 16 May 2024
16 May 2024
EUROCELL PLC
("Eurocell" the "Group" or the "Company")
Trading Update
Eurocell plc, the market leading, vertically integrated UK manufacturer,
recycler and distributor of PVC window, door and roofline products, provides
the following update for the first four months of 2024, in advance of the
Annual General Meeting ("AGM") later today.
Summary
Trading conditions in our key markets have remained challenging, with
continuing macroeconomic uncertainty impacting activity levels in both the
repair, maintenance and improvement ("RMI") and new build markets. However, we
continue to focus on closely managing costs and cash flow and have seen some
further reduction in raw material cost pricing in 2024. As a result, our
expectations for underlying profit before tax for the year remain unchanged.
We are on track with the delivery of the early stages of our new strategy. Our
balance sheet is strong and the actions we have taken, including those on
costs and cash flow, position us well to benefit when our end markets recover.
Trading Performance
Group sales for the four months to 30 April 2024 were down 6%((1)) on the
prior year, with volume down 4%((1)). Comparisons by division were as follows:
Sales to 30 April 2024 vs 2023((1))
Total Group -6%
Profiles Division -10%
Building Plastics Division -4%
(1) On a trading day adjusted basis
Profiles - subdued RMI activity and a continuing weak new build market have
resulted in sales volumes 9%((1)) below 2023.
Building Plastics - although general RMI volumes in the branch network are
down, sales include the initial benefit of good progress with our strategic
initiatives for garden rooms, windows and doors, resulting in overall volumes
level((1)) with 2023. However, increased competition for limited demand
continues to drive pressure on margins in the branch network.
There has been some moderation of input costs, particularly electricity (where
we operate a rolling 12-month forward hedging policy for the majority of our
requirements) and recycling infeed prices, and PVC resin prices have
stabilised. We continue to see inflation elsewhere, including labour costs,
which we have offset with selling price increases implemented towards the end
of Q1 2024.
Capital Allocation
The Board is focused on enhancing shareholder returns and recognises the
importance of our ordinary dividend. We will periodically consider
supplementary distributions, whilst always seeking to maintain a strong
financial position.
The £5 million share buyback programme (the "Buyback") announced on 23
January 2024 has progressed well. As of 14 May 2024, we had purchased 3.3
million ordinary shares of £0.001 each ("Shares") at a cash cost of £4.2
million. As previously announced, the first 642,000 Shares repurchased under
the Buyback are held in treasury and will be used to satisfy employee share
options over the next two years, with other Shares already purchased having
been cancelled. All other Shares purchased under the Buyback in future will
also be cancelled. The Buyback therefore reduces the share capital of the
Company and enhances earnings per share.
Taking into account our strong balance sheet, expected organic investment
needs and good cash management, the Board has taken the decision to extend the
Buyback by up to a further £5 million, thereby increasing the maximum
aggregate consideration to up to £10 million.
Eurocell has given irrevocable and non-discretionary instructions to Peel Hunt
and Berenberg in relation to the Buyback, who will act as principal and make
trading decisions concerning the timing of the purchases of Shares
independently of the Company.
Assuming the applicable authority is granted at today's AGM, the maximum
number of Shares which can be purchased under the Buyback following the
conclusion of the AGM is 10,969,731.
The Buyback will continue to be conducted within the parameters prescribed by
the Market Abuse Regulation 596/2014 and the Commission Delegated Regulation
(EU) 2016/1052 (also as in force in the UK, from time to time, including,
where relevant, pursuant to the UK's European Union (Withdrawal) Act 2018 and
the Market Abuse (Amendment) (EU Exit) Regulations 2019) as well as the
applicable laws and regulations of the UK Financial Conduct Authority.
Save as set out herein, the Buyback will otherwise operate under the same
terms as announced on 23 January 2024.
The Board will keep the Buyback under review and continue to assess it against
market conditions and our capital allocation priorities. There is no guarantee
that the Buyback will be implemented in full.
Board Changes
As previously announced, after nine years of service, Frank Nelson will step
down from the Board at the conclusion of today's AGM and we would like to
thank him for his significant contribution to the Group. Alison Littley will
assume the role of Senior Independent Non-executive Director.
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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