11th Dec 2019 11:06
(Alliance News) - Eurocell PLC said Wednesday it was able to take market share in the second half on the back of a "good" sales performance.
The PVC-U window, door, conservatory and roofline systems distributor recorded like-for-like revenue growth of 11% in the 11 months to the end of November.
The company's Profiles unit posted 5% like-for-like growth, with "good" contributions from existing and new accounts in its Fabricator division.
In Building Plastics, Eurocell achieved 8% like-for-like growth, with better stock availability and a new management team attributed for the rise.
"Gross margin is ahead of last year, reflecting higher usage of recycled material and selling price increases implemented progressively across the business in the first half to recover cost inflation," Eurocell added.
The company continued: "We continue to incur some operating inefficiencies. However, as previously announced, Mark Hemming joined the business as chief operating officer in August. Mark has made an excellent start and is now leading our drive to improve operating efficiency."
In particular, Hemming was focused on improving manufacturing efficiency and increase co-extrusion and foam capacity by 30% and 15%, respectively - which Eurocell said is completed.
He has also put in place a programme, which is "well advanced", to completed the expansion of recycling capacity at its Ecoplas plant. Eurocell experienced some delays with the project in the first half.
"We have continued to incur additional warehousing and distribution costs, particularly through the peak period, including the impact of a change in transport provider in September when the previous contract expired. We are reviewing options to expand our warehousing capacity," Eurocell added.
Also, the company noted it has added GBP5 million in finished goods in its "key" product lines as part of a stock build programme to "mitigate the possible impact of raw material supply interruption due to Brexit".
Eurocell said the increased stock "provides a good level of protection and much improved availability".
"Taken together, these factors underpin our current expectations for full year earnings," Eurocell added.
For 2018, Eurocell''s pretax profit fell 7% to GBP22.1 million despite revenue rising 13% to GBP253.7 million.
The company is scheduled to release its 2019 results on March 13. Shares in Eurocell were untraded in London on Wednesday at 208.04 pence each.
By Paul McGowan; [email protected]
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