Safestyle UK has just had their AGM and has provided a trading update in what continues to be an extraordinary year for the UK fenestration sector as a whole.
Safestyle UK statement:
Alan Lovell, Chairman of Safestyle UK plc, the leading UK focused retailer and manufacturer of PVCu replacement windows and doors for the homeowner market, will make the following statement at today’s Annual General Meeting (“AGM”):
Trading Update
Since our preliminary results announcement at the end of March, I am pleased to report that our trading and financial performance has continued in line with recently increased market expectations.
Revenue for the four months to 30 April 2021 was up 10.4% compared to 2019 and 50.9% compared to 2020. Due to the first lockdown in 2020 where no revenue was earned for the entirety of April, we believe 2019 represents a more meaningful comparison.
Alongside this revenue performance, margins have improved markedly versus both comparative periods with the Group’s margin-enhancing initiatives now contributing meaningfully to our financial results. This improved margin performance is after the impact of cost inflation in resin, other materials and resource-related costs as a result of the current strong demand in our sector.
Order Intake
Following the restart of sales and canvass activity during Q1 as the third COVID lockdown restrictions began to subside, order intake has continued to perform well into Q2. This has enabled us to replenish the majority of the order book utilised in Q1, when sales were partly restricted and installations continued. Consequently, the Group’s order book remains at levels similar to 2021’s strong opening position which continues to provide good visibility of near-term revenues.
So far this year the cost of order acquisition remains below pre-COVID levels although costs have started to climb in this area as the restrictions on other economic activity are removed. So far, this cost movement has tracked the timing of the milestones of the UK Government’s roadmap for lifting all COVID-related restrictions by the end of June. These cost increases remain within the Group’s forecast expectations.
Operations
We have also made progress on the many operational challenges that emerged as the business restarted last year. This includes a specific focus on improving our customer service levels with meaningful investment in areas including call centre staffing, the installations network and ensuring appropriate resource levels to recover a service backlog which built in H2 2020.
Whilst progress has been tangible, there continue to be ongoing challenges in retaining and attracting quality installers and other specialist skillsets as wider market demand strengthens. The actions being taken to address these challenges fit closely with our strategic focus on customer service and establishing standardised business processes.
Strategic priorities progress
The business has continued to balance driving operational performance alongside the programme of strategic change needed to enable sustained long-term growth.
Our programme of work to standardise best practices across our sales and depot network continues. Within sales, our regional management structure and increased availability of management information have started to unlock measurable performance improvements. The same process is underway across our operations network. The process of embedding Standard Operating Processes is expected to be complete by the end of 2022.
There continues to be significant activity aimed at improving and standardising our customer service experience. This has required additional investment in our customer care teams, investment in new technology and software and the recruitment of additional service support staff.
Our work on developing our brand positioning and communication continues, with an agreed set of criteria established for the timing of our return to TV advertising.
Overall, despite the continued disruption in Q1, the business has been able to retain a good level of resource and focus on our longer-term priorities.
Outlook
In light of the continued health of the Group’s order book alongside our current operational capacity levels, the guidance for 2021’s full-year financial performance remains unchanged. At this stage, the Board views the risk of significant further COVID-related disruption to be low, but it continues to monitor developments closely.
The Board plans to provide a half-year trading update to the market in mid-July and intends to announce its half-year results on Thursday 23 September 2021.
Share price
That is a good, solid report from the company. Quite rightly, they are comparing this year’s figures to the 2019 results as 2020 was such a disrupted year and so makes any sorts of comparisons pointless. The company expects a good second half of the year, which the entire sector does too. They have also reported strong margins in spite of rising raw material costs, which indicates that the company is passing down the higher costs to the consumer. This is the right thing to do in light of the amount of spare disposable cash the public have at their disposal right now.
As a result, the Safestyle UK share price this year has been on a solid and prolonged rise:
That is a nice steady climb throughout the year and reflects the performance of the sector overall as well as other fenestration-related publicly traded companies.
They are due to give a H1 update in mid-July which should provide more detail as to the performance of the company in the first six months of the year.
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