Epwin cheers 'robust' performance as turnaround continues
By Josh White
Date: Wednesday 10 Apr 2019
(Sharecast News) - Building products manufacturer Epwin Group reported a fall in revenue and profits in its final results on Wednesday, with revenue down to £281.1m in the year ended 31 December, from £292.8m a year earlier.
The AIM-traded firm said underlying operating profit was £18.7m, falling from £24.2m, while its underlying operating margin shrunk to 6.7% from 8.3%.
Statutory operating profit slipped to £14.8m from £15.1m, and adjusted profit before tax was down to £17.2m from £23m.
Epwin said its revenue was impacted by the previously-reported loss of its two largest customers in the second half of 2017, which cost £27.4m, and the planned closure of the Cardiff plant, which had an impact of £7.3m.
Underlying and statutory operating profits, meanwhile, were also impacted by the loss of its two largest customers in 2017, as well as some unrecovered material cost inflation.
Basic earnings per share were 7.56p, falling from 8.13p, with the board confirming a dividend per share of 4.9p, compared to the 6.69p distribution in 2017.
That was after a proposed final dividend of 3.2p per ordinary share.
Net debt had shrunk by year-end, to £24.8m from £25.1m at the end of the prior year, while the net debt-to-EBITDA ratio grew to 0.9x from 0.8x.
Underlying operating cash conversion was reported to be 148%, compared to 83% 12 months earlier.
Epwin Group said it had made "significant progress" on exiting lower-margin and unprofitable activities, adding that it saw "strong" underlying revenue growth and market share gains in all of its key product areas.
Looking at its ongoing turnaround strategy, Epwin said it had made "substantial" progress with its site consolidation and rationalisation programme, with the Macclesfield extrusion operations consolidated into the Telford plant, and the closure of the loss-making Cardiff window fabrication plant during the year.
It also disposed of its non-core glass-sealed unit manufacturing operation in Northampton in early January, with an associated non-cash asset write-off of £3.6m, and which avoided "significant" cash restructuring costs and ongoing property costs.
Epwin's new warehousing facility in Scunthorpe was now fully operational, with the board also saying that a "significant" new facility was planned in Telford to consolidate Window Systems warehousing, finishing and aluminium operations into one location by early 2020, reducing seven sites to two.
"The group delivered a robust performance in 2018 whilst also making significant strides with our strategy of site consolidations and closures to deliver a more focused and valuable business for the future," said chief executive officer Jon Bednall.
"It was also pleasing to see both market share and volume growth from our key product areas in the year."
Bednall said that overall, the group had an "encouraging" start to 2019, with progress in passing on price increases beginning to mitigate the significant material cost inflation it experienced in the prior two years, which was combining with continuing good volume growth in Epwin's core products and the initial benefits of its footprint reshaping.
"Current trading is line with the board's expectations and we look forward to updating shareholders on our progress during the year."
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