As if further evidence was needed as to the tough trading environment the glazing sector is in right now, accounts posted by Pilkington Group on Companies House show the company lost over £200m in the last financial year.
This painful loss comes against a backdrop of very disturbed trading conditions as we have seen the demise of the UK Windows And Doors Group, and the very severe trouble Safestyle UK find themselves in.
Pilkington posts another major loss
If you have the time, you can read the entire 51 page document here. But the key figures you need to know are that in the last financial year the group lost more than £200m. The last time the business posted a loss of such a magnitude was in March 2020 when they posted a loss in excess of £264m. For context, in the previous year the group posted a pre-tax profit of £367.5m. This is quite a turnaround in just 12 months and demonstrates the severity of rising material, energy and labour costs, as well as a marked drop in demand.
Pilkington UK, part of the wider Pilkington Group, actually increased revenue from £145.5m in 2022 to £148.4m in 2023. They managed to reduce their loss from £64m in 2022 to just £1.5m.
A statement from the company said:
The company revalues its investments with movements in value being reported through other gains and losses in the income statement. This means that the income statement is subject to volatility depending on both the performance of its subsidiaries affecting their valuation, and the effect of exchange based on the underlying currency of the subsidiaries.
The effect of exchange is mitigated to a degree by loans which hedge the underlying investments. The directors are satisfied with the performance of the business which will continue with its principal activity for the foreseeable future.
Backdrop of instability
There is no question about the survival of Pilkington. They are a huge business both in the UK and globally. Their parent company, NSG in Japan has deep pockets and is able to provide stability where needed.
But the scale of this loss comes at a time of great instability in the market. We have just seen the demise of a large multi-brand business in UK Windows And Doors Group. And we are perhaps witnessing the last days of Safestyle UK, once the largest national installer of windows and doors in the country. At a smaller scale, there has been a significant increase in the number of SME fenestration and construction sector companies going bust, with levels of insolvencies back at the height of the 2008 financial crisis.
What is clear, and was comfortably predictable as things began to go south, was that volume-based business making thin margins were always going to suffer when the downturn came. The consumer and now the commercial markets have been hit with a number of different problems all at the same time, resulting in a tightening of credit markets, disposable cash, exploding mortgage payments all combining to depress consumer spending on larger ticket items. Unfortunately for businesses like UKWDG, Safestyle and other larger regional or national installers, the demographic of people they rely on are also the ones being hit hardest.
What is also clear is that the smaller, more agile companies are actually performing better. These are the companies that are able to adapt to changing trends, making the most of the rise in demand for aluminium as an example, and are finding new ways to make good profitable business and able to plan for a successful 2024. We are basically seeing a split within the market play out almost in real time and is providing a good lesson that you cannot stand still in business whether it is in the good times or the bad.
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