Polypipe to cut 250 jobs but says trends improving
Polypipe announced plans on Tuesday to cut around 250 jobs due to the impact of the coronavirus pandemic, but said it had seen an improvement in trading since its last update in May.
The FTSE 250 manufacturer of plastic piping systems said it will cut around 8% of its workforce.
"Medium-term economic and industry forecasts show a significant impact from the COVID-19 outbreak on both the wider UK economy and specifically the UK construction industry," it said.
It noted that the latest forecasts from the Construction Products Association show that residential new build demand in 2021 is likely to be 20% lower than 2019 levels and commercial demand 18% lower than last year, even with recovery in the second half of 2021.
"In light of this medium-term outlook, we are taking regrettable but necessary steps to adjust our manning levels and cost base to reflect this level of demand."
On the upside, however, the group said it had seen improving trends since its update on 7 May, with June revenue 30% below 2019 levels compared to 66% below in April.
Polypipe said its commercial and infrastructure systems business has remained "relatively resilient" throughout the period, with many contractors managing to return to operations, albeit at reduced productivity levels. Recovery in the residential systems segment has been "somewhat more subdued", however, reflecting the shutdown of the new house build market for much of April and May, followed by a more measured return to work.
Overall, group revenue for the six months to June was around 24% lower than the same period a year ago.
"We are encouraged by the group’s performance in May and June compared to April and also by reports of better than expected activity in the housing market after its reopening on 13 May 2020, as well as Government-announced increased levels of investment in infrastructure projects.
"However, at this stage we remain cautious as to whether this performance will be sustained into the autumn and winter."
Polypipe currently has 25% of its workforce furloughed, down from 61% at the height of the crisis.
At 1210 BST, the shares were down 1.7% at 441.50p.