Earnings season is getting underway in UK fenestration, where some of the biggest businesses in our sector will start to report their full 2021 results. Eurocell has just dropped theirs and it’s a demonstration of just how strong demand was during the course of last year.

Here are some of the highlights from that report.

Financial highlights

Here are the main data points from 2021 compared to 2020 and 2019:

Eurocell 2021 financial table

Financial headlines:

• Continued successful deployment of commercial strategies supported by strong underlying demand in our end
markets, with revenue up 23% vs 2019, including:
– Profiles up 22%: good contribution from trade and new build fabricators, as well as a very strong performance
from Vista doors
– Building Plastics up 24%: excellent performance across full range of manufactured products and traded goods
– c.8% from selling price increases and a surcharge implemented to recover raw material price inflation
• Surcharge successfully recovered higher raw material costs, but dilutive to gross margin percentage
• Profit before tax up 19% vs 2019, driven by higher sales volumes
• Continued investment in business growth, with capex of £16.7 million including c.£7 million to expand manufacturing
capacity, c.£2 million to increase logistics capability and c.£2 million for new branches
• Robust balance sheet and liquidity, with pre-IFRS 16 net debt of £11.0 million (2020: £9.9 million)
• Final dividend proposed of 6.4 pence per share, taking total dividends for the year to 9.6 pence, or £10.8 million

Operational headlines:

• Decisive action taken in response to significant supply chain challenges – recovered the impact of unprecedented
raw material cost inflation and secured the materials, labour and transport needed to service demand
• Fit-out of new warehouse and next phase of manufacturing capacity expansion completed – key to delivering future
improvements in operating efficiencies and margins
• 12 new branches opened in 2021 (of which 4 are new larger format), resulting in a total estate of 219 sites


• Strong performance on sustainability as the leading UK-based recycler of PVC windows:
– Further improvement in proportion of recycled material used to 27% (2020: 25%)
– More than 3 million end-of-life window frames recycled, avoiding landfill and driving a significant carbon reduction
(more than 48k tonnes) and substantial cost saving compared to the use of virgin materials
• Commitment to substantial further progress on sustainability, with KPIs published covering the circular economy,
emissions and energy management, and social targets
• Received the London Stock Exchange’s Green Economy Mark, awarded to companies that derive more than 50%
of revenues from environmental solutions, and reflects contributions to the global green economy
• Supporting PVC sector on sustainable development initiatives

Medium-term ambitions

• 3 to 5 year objectives:
– Revenue – outperform our markets
– Recycling – 33% of raw material consumption from recycled material
– Operating profit margin – targeting improvement of 150bps

CEO Mark Kelly:

We entered 2021 well placed to take advantage of the continued recovery in our markets. A very good sales performance has been underpinned by the success of our commercial strategies and high levels of demand in the RMI(4) market, and we are very pleased to report good profit growth and a return to the payment of dividends.

We expect supply chain constraints to ease over the coming months, and the actions we took last year have ensured we have the resources necessary to operate efficiently and support our growth aspirations for revenue and margins.

The RMI sector remains robust, new build continues to grow and customer demand levels are good. With operating constraints resolved, our focus for 2022 will be on delivering improved returns from our strong sales growth.

Notwithstanding the events in Ukraine and the attendant macroeconomic uncertainties, the year has started well, with sales volumes to the end of February up 6% on 2021. We, therefore, continue to see good potential to outperform our markets and deliver further progress.

Everything up

The financial table at the top shows what a good year 2021 was. Given how disruptive 2020 was, with lockdowns and the start of the pandemic, the better comparison is with 2019, and all major metrics are very healthy.

These results should not be a surprise, considering the sheer weight of demand we all nearly crumbled under last year. I fully expect earnings from other major companies to look very similar to this.

How 2022 ends is in question though. The cost of living crisis is beginning to bite hard and inflation threatens to cause major economic problems. I expect the rest of this year to be much more challenging than last year.

It was good to see an increase in the amount of recycled material used within the company, and 3m+ frames kept out of landfill, or 48,000 tons, is very impressive. The push towards net zero and a much more sustainable industry should see those figures pushed even higher this year.

The challenge for 2022 will be to at least sustain what has been built over the last two years. A war in Europe, the continuing potential for supply chain disruption, uncontrolled inflation and a cost of living crisis that will get worse before it gets better will certainly present headwinds. If we’re talking about improved results this time next year, or even results that match 2021, I would chalk that down as a serious win.

View the full 2021 report here: https://investors.eurocell.co.uk/media/1318/2021-prelim-results-final.pdf

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