That headline doesn’t sound good does it. A £16m loss is a bad result no matter who you are. But, you only need to look at the share price of Safestyle since the figures came out to see what the bigger picture tells us. This is my brief shakedown of the 2018 results for the company.
All the bad news
A new market entrant, Brexit, HSE fines and litigation. 2018 was about as rough as it gets for a company. They took hefty damage. But in one crucial area they won, and that was against SafeGlaze. So whilst 2018 is a year they probably won’t look back with fondness, they can also look back at the year and say that perhaps this was the turning point for the company as well.
Here are the financial highlights:
The crux of the matter is this: the company lost £16m last year. But that was then and this is now.
This is what their CEO Mike Gallacher said:
The business faced a unique and challenging operating context in 2018, but I am pleased to say that, through the dedication and hard work of our people, we ended the year with our business stabilised and trading position materially improved.
With many of the issues faced in 2018 behind us, our experienced management team is wholly focused on driving growth, improving margins and building on the underlying strengths of the business. We are the UK market leader, with a strong brand, industry leading production facilities and skilled people across the organisation. Whilst there is still much work to do, we look forward to the opportunities of the year ahead and returning Safestyle to profitability.
This is their outlook for 2019:
2019 represents a key year for the Group’s turnaround and the Board is confident, despite the broader market backdrop of weaker consumer confidence, that Safestyle can emerge stronger for the future.
The momentum generated by an improvement in sales order intake in the last two months of 2018, following the recovery in the Group’s contracted workforce numbers, has continued into the first part of 2019. This represents an encouraging start to the year.
Safestyle is well-invested in its manufacturing facilities and remains focused on implementing phase two of its three phase turnaround plan to develop a more efficient, professional and profitable business, whilst retaining as much as possible of what made the Group successful in the past.
The Board expects the Group to return to profitability in 2019 and to generate positive cash flow. Whilst cognisant of the broader macro-economic uncertainty, the Board recognises that 2019 represents a year of turnaround as opposed to an immediate return to the Group’s historical levels of financial performance.
They are confident that the plans they put in place at the end of 2018 are already starting to work and they see 2019 as a better year than the year previous. If Brexit is the only thing they have to worry about then perhaps it will be.
You can read their full financial report for 2018 here in a lot more detail: http://otp.investis.com/clients/uk/safestyle/rns/regulatory-story.aspx?newsid=1241706&cid=656
That term is given to places, people, or in this case companies, that give an indication as to the overall state of things. Safestyle is a bell-weather company. They are a national installer, and are therefore exposed to the UK economy on a national scale far more than local level. This is why I pay attention to companies like this. Whilst much of our industry remains focused on B2B level activity, it is installers like this which give a much more immediate signal as to what is actually going on at ground level before it reaches further up the supply chain.
You don’t have to like how they do business. You are all aware how I am very much against archaic sales methods. But putting that aside, this is a company we all have to pay an interest in. They are at the coal face, as it were. Their exposure to UK home owners across the country means they are a signalling company. They can give us a hint as to the state of things in the wider industry.
They faced unique circumstances last year. I don’t think anyone out there could say another company had faced such a number of very differing problems to tackle all at the same time. What I will be looking out for are their Q1 and Q2 statements later on in the year. This will give us an indication as to how well their recovery programme is coming along, as well as a hint about the health of the wider industry.
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