Earnings season in the fenestration sector continues, with some of the largest publicly traded companies in the industry continuing to report on 2022 performance. Today it is the turn of Safestyle UK. Although they report a solid year, there are hints in the statement below that there are more challenging times ahead for the company and the market in general:

Safestyle UK plc (AIM: SFE), the leading UK focused retailer and manufacturer of PVCu replacement windows and doors for the homeowner market, today issues a trading update for the year ended 1 January 2023 (“FY22”) ahead of announcing its Final Results on 23 March 2023.

The Group expects to report revenues of c.£154.3m, c.7.7% higher than the prior year, and an underlying loss before tax in line with market expectations*.

Further, the Group is pleased to report it completed the transition to its new supplier of PVCu profile on time and on budget over the Christmas period and is now manufacturing products using the Liniar system.

The cash position has reduced in line with the trading performance by c.£4.1m to £8.0m compared to the prior year’s net cash balance of £12.1m at 2 Jan 2022.  The decrease from the balance of £9.0m expected at the time of the Group’s trading update in November 2022, is predominantly due to the timing of working capital unwinds and non-recurring items.

Separately, the replacement of the Group’s existing facility with a new £7.5m RCF to the end of 2026 has been completed.  As reported previously, the Group’s borrowing facilities will continue to be provided by Aurelius, albeit terms and pricing now represent a reduced cost commensurate with the improved health of the balance sheet.

Current Trading and Outlook

Whilst the Board expects that trading conditions will remain reasonably challenging in the short-term given the wider consumer environment, the Group’s order book at 31 January 2023 was marginally higher than at the same time last year.  The Board is also confident that the Group’s proposition will combine well with what has historically proven to be a resilient sector supported by an ongoing focus on energy-saving products by consumers.

Rob Neale, CEO of Safestyle, commented:

“Despite a number of unforeseen challenges in 2022, I am pleased with the significant progress we delivered on our strategic priorities and whilst we remain mindful of the difficulties facing UK consumers, we are confident that our business will continue to trade resiliently and return to profitability in 2023.  Since taking on the CEO role in December, I am excited about the medium term opportunities for the Group and look forward to updating shareholders on progress at our Final Results in March.

*current analyst consensus for the year ended 1 January 2023 is revenue of £154m and an underlying loss before tax of £(4.5)m.

View statement on Safestyle UK Plc website: https://otp.investis.com/clients/uk/safestyle/rns/regulatory-story.aspx?newsid=1665738&cid=656

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