TIDMECEL
RNS Number : 5270A
Eurocell plc
23 January 2024
23 January 2024
EUROCELL PLC
("Eurocell" or the "Group")
Year End Trading Update - Profits In Line with Expectations;
Strong Cash Flow
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 2023.
Summary
The trends reported at our half year results in September
continued for the remainder of 2023, with some further modest
weakening in our key markets. Repair, maintenance and improvement
(RMI) activity continues to be impacted by low consumer confidence
and higher costs of living. The ongoing steep decline in new build
activity reflects successive interest rate rises and falling house
prices, with house builders reducing build rates in anticipation of
falling sales.
Against the challenging market backdrop, we have delivered some
resilience in the Group's sales performance for the year. We
continue to focus on closely managing cost and cash flow and, as
expected, have seen some easing of input cost pricing in H2.
Despite these challenges, we are pleased to confirm that we
anticipate underlying profit before tax for the year ended 31
December 2023 to be in line with market expectations.
Trading Performance
Reported sales for the year ended 31 December 2023 were GBP365
million, down 4% on an exceptionally strong 2022 comparative
period, with volume 6% lower. Comparisons by division were as
follows:
Sales vs 2022 6 months 6 months 12 months
to 30 June to 31 Dec to 31 Dec
2023 2023 2023
Total Group -2% -6% -4%
Profiles Division -1% -8% -4%
Building Plastics Division -3% -6% -4%
------------ ----------- -----------
Profiles - reduced RMI activity and a significantly weaker new
build market, partially offset by the benefit of market share
gains, resulted in sales volumes 7% below 2022. We have continued
to acquire new fabricator accounts, supported by a reduction in UK
capacity following the closure of the Duraflex extrusion business
in September. In addition, some of our existing fabricators have
benefited from an increase in volume following the administration
of Safestyle in October.
Building Plastics - RMI volumes in the branch network were down
5% on 2022 and remain subdued, with increased competition for
limited demand leading to ongoing pressure on margins. Sales
include an increase in our made-to-order products, which extend
living spaces, such as garden rooms.
As reported in September, we experienced persistent input cost
inflation H1 2023, particularly for labour and electricity, which
we offset with selling price increases where possible. In addition,
recycling feedstock prices were significantly higher than the first
half of 2022. However, as noted above, we have seen some easing of
input cost pricing in H2.
As previously announced, in response to lower sales volumes, we
took early and decisive action on costs, with restructuring
programmes implemented in Q4 2022 and Q2 2023, securing annualised
savings of GBP9 million, of which GBP7 million were realised in
2023. The related redundancy costs from the Q2 2023 programme,
together with cloud computing costs incurred on strategic IT
projects, will be reported as a non-underlying item of
approximately GBP3.5 million in our 2023 financial statements.
We have also continued to focus on efficient inventory
management to drive good cash flow performance. As a result, net
cash on a pre-IFRS 16 basis was GBP0.4 million at 31 December 2023,
compared to net debt of GBP14 million at 31 December 2022.
Review of Strategy
As reported in September, we have been reviewing our strategy,
including the optimisation and expansion of the branch network, an
enhanced customer proposition and simplified business structures.
We expect to report the conclusions from our review at the time of
our 2023 full year results announcement (see Notice of Results
below).
Capital Allocation
The Board is focused on enhancing shareholder returns and
recognises the importance of our ordinary dividend. We will also
periodically consider supplementary distributions, whilst always
seeking to maintain a strong financial position. Taking into
account expected organic investment requirements and our successful
cash flow management in 2023, which resulted in net cash of GBP0.4
million at the year end, we are now launching a GBP5 million share
buyback programme, full details of which will be announced
separately today.
Notice of Results
We expect to publish our results for the year ending 31 December
2023 on 20 March 2024.
This announcement contains inside information for the purposes
of the Market Abuse Regulation (EU) no. 596/2014 (including as it
forms part of the laws of England and Wales by virtue of the
European Union (Withdrawal) Act 2018) ('MAR').
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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