Eurocell Advises Of A Strong First Four Months of 2021

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 first four months of 2021, in advance of the Annual General Meeting at 3pm today⁽¹⁾. 

Summary

We are pleased to report that, following the good start we made in the first two months of the year, trading continued to improve through March and April. Group like-for-like⁽²⁾ sales for the four months to 30 April 2021 were up 20% compared to 2019 and 26% compared to 2020. 

As a result of stronger than anticipated sales for March and April, and an improved outlook for the first half, we now expect profit before tax for the full year 2021 will be ahead of current market expectations⁽³⁾. 

Trading Performance

Sales growth rates for the four months to 30 April were as follows: 

This encouraging start to the year has been underpinned by strong demand in the repair, maintenance and improvement (RMI) market. Furthermore, we believe we are also continuing to take market share. Group like-for-like⁽²⁾ sales growth to 30 April of 20% compared to 2019 includes: 

• Profiles up 17% - good contributions from trade fabricators, who are substantially focused on the RMI market, and a very strong performance from Vista doors. New build has also enjoyed a good start, with increasing housing market activity supported by ongoing Government incentives and continued high levels of mortgage approvals and demand
  
  
• Building Plastics up 23% - strong performance across our full range of own-manufactured products and traded goods. We previously announced our intention to open up to 12 new branches this year. Sites for all 12 have been identified, 4 of which are the new larger format. We expect 3 to be open by 30 June, with the remaining 9 to follow in H2 

Group sales growth compared to both 2019 and 2020 includes approximately 2% from selling price increases and a resin price surcharge, implemented during February and April 2021 respectively, to mitigate raw material price inflation (see below). 

Reported Group sales growth of 75% compared to 2020 reflects the impact of the closure of our business from 23 March to mid-May last year, resulting in only 58 trading days, compared to 83 in 2021. 

Raw Material Supply Chain

Strong demand in our markets has put sector supply chains under pressure. We are experiencing tighter supply and an increasingly inflationary environment, with prices of certain raw materials, particularly PVC resin, rising significantly in 2021. 

To date we have secured the raw materials we require and we are mitigating cost inflation with selling price increases, and 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 supplied 25% of our raw material consumption in 2020. 

New Warehouse

Fit-out of our new state-of-the-art warehouse is proceeding to plan. After successfully beginning commercial operations from the new site in January for the Profiles division, we achieved a second major milestone with the transition of Building Plastics in April. The final stages are expected to complete in Q2 and we expect customer service levels to improve further as the new plant, systems and processes become embedded. As well as being central to increasing capacity, the new warehouse is key to delivering anticipated improvements in operational efficiencies. 

Outlook

The short-term outlook for the first half has improved which, combined with our increasing confidence in the strength of our markets, has led to an improvement in our full year expectations. Nevertheless, we continue to take a cautious view of H2, driven by raw material supply chain risks and limited visibility of consumer spending patterns following the pandemic. 

COVID-19 Update

We have maintained a good health and safety performance, with safe working practices for COVID-19 operating well across the business. In line with UK Government guidance, our manufacturing plants, branch network, distribution and recycling operations have all remained open throughout 2021. 

Notice of Results

We will announce our half year results for the six months ending 30 June 2021 on 3 September 2021.

1)  The 2021 Annual General Meeting will be held at 3pm today at Eurocell Head Office and Distribution Centre, High View Road, Alfreton, Derbyshire, DE55 2DT. As previously announced, and in line with Government guidance in relation to COVID-19, shareholders, proxies and other attendees will not be permitted to attend the AGM in person and shareholders have been strongly advised to vote by proxy. A facility to ask the directors questions by email was made available. Answers will be published, in due course, on the Company's website: www.eurocell.co.uk.

(2)  Like-for-like excludes acquisitions and new branches opened in 2019/20/21, and is calculated by comparing average sales per trading day for the period 1 January to 30 April in each year (i.e. 83 days in 2021 and 2019, and 58 days in 2020, which excludes days closed due to the first COVID-19 lockdown).

(3)   Eurocell calculated analyst consensus profit before tax forecast for 2021 of £20.5 million.

Source : Eurocell

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