Trading Update November 2021
24 November 2021
("Eurocell" or the "Group")
Trading Update - Continued Growth, Outlook Confirmed
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 ten months to 31 October 2021.
The positive sales trends from H1 have continued into the second half of the year, supported by good underlying demand in our markets. We are taking effective action to mitigate ongoing cost inflation and supply chain pressures. As a result, we remain on track to deliver profit before tax for the full year in line with market expectations(1).
Group sales for the four months to 31 October were up 18% compared to 2019 and 5% compared to 2020, with the latter reflecting a very strong second half last year. For the ten months to 31 October 2021, sales were up 21% compared to 2019 and 38% compared to 2020. Divisional growth rates were as follows:
4 months to 31 Oct 2021
4 months to 31 Oct 2021
Building Plastics Division
Whilst demand in the repair, maintenance and improvement (RMI) market has moderated from the unprecedented levels experienced in H2 2020 and H1 2021, this sector remains strong. Furthermore, we believe we are also continuing to take market share. Group sales growth for the ten months to 31 October of 21% compared to 2019 includes:
· Profiles up 19% - good contributions from trade fabricators, who are substantially focused on the RMI market, and another very strong performance from Vista doors. New build has enjoyed improved sales in the second half, with the house builders now focused on achieving year end completion targets
· Building Plastics up 23% - good performance across our full range of own-manufactured products and traded goods, including more than 50% growth in outdoor living products, supported by a consistently strong order book. We opened 8 new branches in the first ten months, with a further 4 new sites to follow by the end of the year. 4 of this year's new branches are the new larger format
We have continued to secure most of the raw materials we require, and we are mitigating raw material cost inflation with selling price increases, and primarily 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. So far this year, these plants have supplied 27% of our raw material consumption (year ending 31 December 2020: 25%), driving significant cost and carbon savings compared to the use of virgin material.
FTSE Green Economy Mark(2)
We are pleased to report that Eurocell has received the London Stock Exchange's (LSE) Green Economy Mark, which is awarded to companies that derive more than 50% of revenues from environmental solutions, and reflects contributions to the global green economy. In our case, the LSE also recognised that our PVC profiles can be recycled up to 10 times and have a life span of around 100 years. The fact that we operate recycling plants and use recycled material in our products was also a significant factor.
New Warehouse and Manufacturing Capacity Expansion
Fit-out of our new state-of-the-art warehouse is now complete. As well as being central to increasing capacity, the facility is key to delivering further improvements in operational efficiencies as the new plant, systems and processes become embedded. We were delighted that, earlier this month, the facility won the Warehouse Initiative Prize at the National Supply Chain Excellence Awards. The award recognises the innovative storage and picking solutions implemented, alongside improved safety and sustainability criteria.
The manufacturing capacity expansion planned for this year, including 5 new extrusion lines, together with the associated mixing plant upgrade and tooling, is now substantially complete. As previously reported, we plan to add a further 5 lines in 2022. These investments increase extrusion capacity by more than 15%, thereby enabling future sales and market share growth.
Notice of Results
We expect to publish our results for the year ending 31 December 2021 on 18 March 2022.
(1) Eurocell calculated analyst consensus profit before tax forecast for 2021 of £26.5 million.
(2) This classification, first introduced in 2019, was created to highlight companies and investment funds listed on all segments of London Stock Exchange's Main Market and AIM that are driving the global green economy. To qualify for the Green Economy Mark, companies and funds must generate 50% or more of their total annual revenues from products and services that contribute to the global green economy.
The underlying methodology incorporates the Green Revenues data model developed by FTSE Russell. It provides a detailed taxonomy of environmental goods, products and services, and is designed to recognise both 'pure-play' green technology companies, as well as those across all industries that make significant contributions to the transition to a sustainable, low carbon economy.
Mark Kelly, Chief Executive Officer
+44 (0) 1773 842 105
Michael Scott, Chief Financial Officer
+44 (0) 1773 842 140
Ben Foster (Teneo)
+44 (0) 777 624 0806