On the 4th September Eurocell published their H1 financial results for 2020. There are a swathe of results for H1 coming through from our industry’s biggest companies and they are our first solid flavour as to how the pandemic has affected trading performance.

Last week I wrote about Epwin Group’s results, which you can catch up on here.

As you would expect

As was the case with Epwin’s results, there was a marked drop in revenue in H1 of this year compared to the same period last year. Here are the financial highlights:

Credit: Eurocell

Revenues are down over £40m compared to H1 of last year, not as bad as Epwin’s results if we’re comparing the two. And as with Epwin there is no dividend. But unlike Epwin, Eurocell have also provided their results for July and August of this year to give us better context and to demonstrate that business is firmly back in recovery mode:

Credit: Eurocell

The company is already showing a 12% jump for July/August, which reflects the high level of demand from installers that has found its way back up the top of the supply chain.

Operational Headlines

·    Business temporarily closed in line with official COVID-19 guidance from the UK Government on 23 March

·    Phased re-opening from 11 May, following updated guidance and implementation of safe working practices

–     All sites open in June except Eurocell Recycle North, which followed in July

–     Better operating efficiencies since re-opening

·    Fit-out of new state-of-the-art warehouse on track and continuing to target being operational early in 2021

–     Key to increasing capacity and delivering further operating efficiencies

·    Strong on sustainability, as the leading UK-based recycler of PVC windows, with use of recycled material increased to 26% of material consumption (H1 2019: 22%)

Financial Headlines

·    Sales down 31%, equivalent to a decline of 4% on a like-for-like(3) basis, reflects:

–    Performance for 11 weeks to 20 March in line with expectations, with like-for-like(3) sales up 3% against a tough comparative (Q1 2019 like-for-like sales growth was 10%)

–     Business closed from late March to mid-May, resulting in 90 trading days in H1 2020 compared to 124 in H1 2019

–     Good performance since re-opening, with June like-for-like(3) sales down just 6% on 2019 and strong start to Q3   

·    Gross margin down 430bps, reflects reduced production volumes and therefore lower recovery of direct costs

·    Underlying overheads down 17%, includes support received under the Coronavirus Job Retention Scheme of £6.3 million, partially offset by an increase to the provision for bad debts of £2.9 million

·    Adjusted(1) loss before tax of £8.6 million, driven by lower sales volumes and the impact of operational gearing

·    Reported loss before tax of £16.5 million includes non-cash goodwill impairment charge of £5.8 million

·    Strong balance sheet and liquidity, with pre-IFRS 16 net debt of £23.5 million (H1 2019: £36.7 million), reflecting swift actions taken to preserve cash and benefit of April share placing (£17.1 million, net)

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View the entire Eurocell report here

Despite the disruption, it was good to see solid year on year growth in the use of recycled materials. Its important to recognise that whilst COVID remains the single biggest issue we’re all continuing to tackle, sustainability and recycling still remains the largest long term hurdle we all have to tackle.

As I said in my analysis of Epwin’s results, the above is pretty much what you would expect. When the results of other large fenestration suppliers come out they will all look very similar as well. We knew H1 results were going to be rough, and that’s exactly what they are. To that end, the H1 results are fairly innocuous. What matters now is the scale of the recovery for these businesses in H2. Eurocell have demonstrated in these results by providing figures for the first two months of this second half that they are on a good road to recovery.

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