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
