30th Apr 2015 10:32
LONDON (Alliance News) - Superglass Holdings PLC Thursday confirmed a narrowed loss for the first half of its financial year as cost cutting more than offset a 10% decline in revenue, and the producer of insulation products said it still expects to return to an operating profit in the second half thanks to restructuring, improved volumes and price increases.
The company saw its shares drop last month when it warned that it would report another loss before interest, taxation, depreciation and amortisation for the first half that ended February 28, blaming a lack of activity in the UK government's latest schemes to persuade householders to improve the energy efficiency of their homes.
On Thursday, It reported a pretax loss of GBP2.8 million for the half, compared with a GBP4.3 million loss a year earlier, while its Ebitda loss before exceptional items was GBP1.9 million as flagged last month, compared with a loss of GBP2.3 million a year earlier. That came despite a 10% decline in revenue to GBP10.3 million, from GBP11.4 million a year earlier, with sales volumes down by the same percentage, as it reduced costs.
Superglass got a boost from previous government schemes encouraging householders to insulate their homes, but the new schemes have attracted less interest, and the company started to struggle. It had to raise GBP6.3 million in a discounted share placing last October to help fund a restructuring and to finance its trading losses.
However, it had to book unplanned costs in the first half after its waste glass supplier, Viridor, switched deliveries to Superglass to a newly constructed plant capable of supplying better quality material.
"This is welcome news for the longer term, however considerable unplanned work has been necessary to adapt the company's manufacturing processes to accommodate supply from the new source and this has impacted production costs and capacity in the short term. The company is working closely with Viridor with a view to securing regular and reliable deliveries of waste glass of a specification that is better suited to the company's existing manufacturing infrastructure," it said.
It said that its turnaround remains "broadly on track", with a planned capacity reduction to take effect later this year.
As well as stripping out costs, Superglass has been refocusing on growing construction markets, which has started improving its margins. It is also set to get a boost in the second half from price increases it announced last December and which were implemented in March.
"The board is optimistic that the combination of growing markets and tighter overall capacity is likely to create a more positive environment for price and margin improvement over the balance of the year," it said.
"It is expected that the increase in volumes seen in the first quarter of calendar 2015 will be sustained and planned price growth realised, along with the delivery of planned cost savings. The overall trading performance of the business continues to be in line with management expectations as outlined in the recent trading update, underpinning the board's confidence in a return to positive EBITDA in aggregate during the second half of the year. As a result the board looks forward, for the first time in several years, with a sense of cautious optimism for the future," the company said in its outlook statement.
It said it ended the first half with a cash balance of GBP4.1 million, reflecting a focus on cash management.
It isn't currently paying a dividend having stopped in 2010. It reiterated that it wants to resume payments when profitability, cash generation and underlying growth justifies the move.
Superglass shares were down 3.1% ay 5.09 pence Thursday morning, although they are still up 10.7% so far in 2015.
By Steve McGrath; [email protected]; @stevemcgrath1
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