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Safestyle warns of short-term hit to profitability

By Michele Maatouk

Date: Monday 27 Jan 2020

Safestyle warns of short-term hit to profitability

(Sharecast News) - Windows and doors maker Safestyle warned on Monday that investments made as part of its turnaround plan will dent short-term profitability.
In an update ahead of its preliminary results for the year to the end of December, the company said it will invest around £3m in 2020 as it looks to put in place the foundations for "sustainable, long-term growth and UK market leadership". However, this is expected to have a negative impact on short-term profitability.

The company said it had made good progress on reaching the milestones outlined in phase two of its turnaround plan, recovering volumes and market share, restoring operational effectiveness, reducing costs and enhancing margins. This was achieved against a backdrop of weak consumer confidence and "challenging" market conditions in the second half, it said.

Turnover for the year was expected to be around £126m, while the underlying pre-tax loss for the year was set to be up to £1.5m versus an £8.7m loss the year before.

Chief executive officer Mike Gallacher said: "The new executive team has been in place for 12 months and I am pleased with the pace at which we have stabilised the business, reduced costs, embedded regulatory compliance and enhanced our operational effectiveness. However, there remains a lot to do as we move into the final phase of our turnaround plan.

"Recently and concurrent with our internal challenges, there have been huge regulatory changes in the industry, whilst consumer buying behaviour and customer service expectations have evolved. As the UK market leader, with the right investment in 2020, we believe we are ideally placed to benefit from these trends and I am determined to further establish the foundations needed to deliver sustainable profit growth and long-term success for Safestyle."

At 1240 GMT, the shares were down 13% at 60p.

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