Earlier this month Eurocell published its full results for the first half of this year. Despite a drop in revenues, which is fully expected considering the trading conditions our sector has had to endure this year, they have reported a sharp increase in profits compared to H1 of 2023.
Eurocell profits up
Here is the key stats table from their published results:
Revenues dropped by 5% compared to the same period in 2023. Volume was down 3%, with profile sales down 9%. None of this should be surprising as we know that this has been a tough year for much of the sector, especially the PVCu side of it. However, despite the drop in revenue, Eurocell, through headcount changes and internal efficiencies has managed to improve profits by an impressive 33%.
Eurocell has also been able to increase the amount of recycled materials in its products from 32% in H1 of 2023 to 33% in H1 of this year.
Another bright spot in this report is that they have managed to reduce their debt to £60.9 from £75.8m – a reduction of nearly £15m. This is a significant point. In a downward market, companies ought to be looking to shed debt where they can as the interest payments alone can be a drag on cash flow and general spending. This is solid reduction and if this trajectory can be maintained over the next couple of years this will put Eurocell in a great position.
CEO comment
This is the statement provided by the Eurocell CEO, Darren Waters, in this report:
Trading conditions continue to be tough in 2024, with ongoing macroeconomic uncertainty impacting our key markets, exacerbated by wet weather and the General Election. Customers remain cautious, resulting in lower investment in home improvements and subdued activity levels in the residential construction market. As a result, H1 sales were 5% below H1 2023.
However, first half adjusted profit before tax was up 33% on H1 2023, as we continue to proactively manage our gross margin and cost base, which has supported a reduction in input cost pricing, and our expectations for the full year remain unchanged.
Earlier this year we launched our new strategy, which identified a pathway to building a £500 million revenue business, generating a 10% operating margin, over a five-year period. We have good early momentum with our new strategic initiatives and are becoming increasingly confident that, whilst this is an ambitious target, it is achievable.
The UK construction market continues to have attractive medium and long-term growth prospects, driven by the structural deficit in new build housing and an ageing housing stock that requires increased repair and maintenance. Overall, we believe the progression of our strategy, together with the actions we have taken on cost and cash flow over the last eighteen months, leave the business well-positioned to drive sustainable growth in shareholder value.
In a market that has struggled for much of this year, and had a torrid summer, these results from Eurocell should be seen as a bright spot in the wider market. It is evidence that profit can still be made if the right decisions are undertaken.
Read the full set of results here: https://investors.eurocell.co.uk/media/1493/2024-hyr-final.pdf
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