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Eurocell Publishes Half Year Trading Update

Eurocell New Branch

Financial Headlines

  • Continued successful deployment of commercial strategies, with sales up 23% vs H1 2019, including:
  • Profiles up 19%: good contribution from trade fabricators (substantially focused on the RMI(3) market) and new build fabricators, as well as a very strong performance from Vista doors.
  • Building Plastics up 27%: excellent performance across full range of own-manufactured products and traded goods
  • c.5% from selling price increases and a surcharge implemented to mitigate raw material price inflation
  • Surcharge successfully recovering higher raw material costs, but dilutive to gross margin percentage
  • Profit before tax up 37% vs H1 2019, driven by higher sales volumes and the impact of operational gearing
  • Capex of £7.3 million includes c.£2 million to expand extrusion capacity
  • Strong balance sheet and liquidity, with pre-IFRS 16 net cash of £1.3 million (H1 2020: net debt of £23.5 million)
  • Interim dividend reinstated at 3.2 pence per share (£3.6 million), payable on 8 October 2021

Operational Headlines

  • Strong on sustainability as the leading UK-based recycler of PVC windows
  • Further improvement in proportion of recycled material used to 28% (full year 2020: 25%)
  • Commitment to substantial further progress on sustainability, with KPIs published covering the circular economy (including recycling), emissions and energy management, and social targets
  • Fit-out of new state-of-the-art warehouse now complete - key to increasing capacity and delivering anticipated improvements in operating efficiencies
  • 4 new branches opened in H1, with a further 8 planned for H2 (of which 4 are new larger format).

 Mark Kelly, Chief Executive of Eurocell plc said:

"We entered 2021 well placed to take advantage of the continued recovery in our markets and we have delivered strong financial results for H1. A very good sales performance has been underpinned by the success of our commercial strategies and high levels of demand in the RMI market. We believe we are also continuing to take market share.

"Although high demand has put sector supply chains under pressure, to date we have secured most of the raw materials we require, and we are mitigating cost inflation with selling price increases, a surcharge and through our market-leading recycling plants. As a result, we are very pleased to report strong profit growth for the first half and to confirm a return to dividend payments.

"Trading performance in July and August has continued to be robust. With the industry close to capacity and lead times growing, we are becoming more confident that these market conditions will continue for the foreseeable future. Reflecting these factors, and notwithstanding very tight supply chains, labour and transport availability, the Board is now again raising its expectations for the full year."

Source: Insight Team & Eurocell

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03 September 2021

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