Eurocell Revenue Up Though Weak Market, Higher Costs Hit Profitability

9th Mar 2018 11:49

LONDON (Alliance News) - Eurocell PLC said Friday 2017 was a strong year for the company, though profitability was hit by higher raw material costs and a subdued repair, maintenance, and improvement market.

Eurocell manufactures, distributes, and recycles window, door, and roofline PVC products.

Statutory pretax profit for 2017 fell by 1% to GBP23.7 million, though on an adjusted basis the figure rose by 1% to GBP24.5 million.

Eurocell's 2017 revenue increased 10% to GBP224.9 million from GBP204.8 million. Excluding acquisitions, revenue growth was 8%, and this includes like-for-like sales growth of 4%, of which 6% was in the Profiles division and 3% in its Building Plastics business.

Eurocell declared a final dividend of 6.0 pence per share, taking the total return to shareholders for 2017 to 9.0p, up 6% on the previous year.

Production was "consistent" in 2017, the company said, with approximately 44,400 tonnes of rigid and foam PVC profiles being made at its primary extrusion facilities, a figure 9% higher year-on-year.

Plans to mitigate higher raw material costs led to increased scrap and lower overall equipment effectiveness levels, due to trials of new materials and new technology testing.

Total revenue in 2017 for the Profiles division increased 10% to GBP139.6 million, with adjusted earnings before interest, tax, depreciation, and amortisation increasing 2% to GBP23.1 million. Eurocell said it continued to gain market share during the year, despite the subdued RMI market, which was particularly the case in the second half of the year.

In Building Plastics, revenue was up 12% year-on-year to GBP131.8 million, but adjusted Ebitda decreased by 3% to GBP8.6 million, with higher overheads caused by increased investment and raw material prices.

Eurocell expects investments made into its strategy in 2017 to lead to higher market share going into 2018. Sales in the first two months of 2018 have met expectations, the company said.

Chief Executive Mark Kelly said: "I am pleased to report a strong performance for Eurocell in 2017. We have made excellent progress with our strategic priorities, continued to invest significantly in the growth of our business and made further gains in market share."

"Profit was impacted by raw material cost inflation and a subdued RMI market, especially in the second half. However, the benefits of our differentiated business model are becoming increasingly evident. I expect the investments we are making to deliver further gains in market share and allow Eurocell to take more control of material costs in the future," Kelly added.

Shares were down 0.9% on Friday morning at a price of 215.00p each.

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