20 July 2021
("Eurocell" or the "Group")
Trading Update - Strong First Half and Improved Outlook
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 six months ended 30 June 2021.
We are pleased to announce that the good performance reported for the first four months of the year continued in May and June. Reported Group sales for the six months to 30 June 2021 were £168 million, representing a like-for-like(1) increase of 21% compared to 2019 and 34% compared to 2020.
As a result of stronger than anticipated first half performance, and a further improvement in the outlook for H2, we now expect profit before tax for the full year will be ahead of current market expectations(2).
Sales growth rates for the six months to 30 June were as follows:
2021 vs 2019
2021 vs 2020
Building Plastics Division
This encouraging performance has been underpinned by strong demand in the repair, maintenance and improvement (RMI) market. Furthermore, we believe we are also continuing to take market share. Group like-for-like(1) sales growth to 30 June of 21% compared to 2019 includes:
· Profiles up 19% - good contributions from trade fabricators, who are substantially focused on the RMI market, and a very strong performance from Vista doors. New build has also enjoyed good sales, with increasing housing market activity supported by continued high levels of mortgage approvals and demand
· Building Plastics up 23% - strong performance across our full range of own-manufactured products and traded goods. We opened 4 new standard format branches in the first half, with a further 8 new sites to follow in H2, 4 of which are the new larger format
Group sales growth compared to 2019 includes approximately 5% from selling price increases implemented during February and a resin surcharge levied progressively from April, to mitigate raw material price inflation (see below).
Reported Group sales growth of 80% compared to 2020 reflects the impact of the closure of our business from 23 March to mid-May last year, resulting in only 90 trading days, compared to 124 in 2021.
Raw Material Supply Chain, Labour and Transport
As we have previously reported, strong demand in our markets has put sector supply chains under pressure, and this shows no sign of abating. We are experiencing tighter supply and an inflationary environment, with prices of certain raw materials, particularly PVC resin, rising significantly in 2021.
To date we have secured the raw materials we require, and we are mitigating cost inflation with selling price increases, and for resin, a surcharge adjusted monthly in response to price changes.
Higher resin costs are also partially offset by our market-leading recycling plants, which as well as keeping up with increased demand, continue to improve the proportion of recycled material used in our primary extrusion operations. These plants supplied a record 28% of our raw material consumption in the first half (year ending 31 December 2020: 25%).
Availability of the incremental operational labour we need to service strong demand is also tight. In addition, in the light of a well-publicised shortage of HGV drivers in the UK, our outsourced transport provider has faced challenges providing the required number of vehicles to service higher than expected sales.
Fit-out of our new state-of-the-art warehouse is now substantially complete. We expect customer service levels to improve further as the new plant, systems and processes become embedded. As well as being central to increasing capacity, the new warehouse is key to delivering anticipated improvements in operational efficiencies.
We have maintained a good health and safety performance, with safe working practices for COVID-19 operating well across the business, although we are currently experiencing an elevated level of absence due to employees being required to self-isolate. In line with UK Government guidance, our manufacturing plants, branch network, distribution and recycling operations have all remained open throughout 2021.
Half Year Results
We look forward to providing a full update when we announce our half year results for the six months ending 30 June 2021 on 3 September 2021.
This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.
(1) Like-for-like excludes acquisitions and new branches opened in 2019/20/21, and is calculated by comparing average sales per trading day for the period 1 January to 30 June in each year (i.e. 124 days in 2021 and 2019, and 90 days in 2020, which excludes days closed due to the first COVID-19 lockdown).
(2) Eurocell calculated analyst consensus profit before tax forecast for 2021 of £22.8 million.
Mark Kelly, Chief Executive Officer
+44 (0) 1773 842 105
Michael Scott, Chief Financial Officer
+44 (0) 1773 842 140
+44 (0) 777 624 0806