Eurocell has issued a profit warning after a “particularly severe” decline in new-build housing saw it make a new round of job cuts.
First-half (H1) results for the PVC window manufacturer show a pre-tax profit of £3.5m in the six months to 30 June – down from £15.7m in H1 last year — while revenue fell by 2 per cent year-on-year to £184.4m.
The firm said it had taken “early and decisive” action, which included cutting 100 jobs in the second quarter of this year with a view to reducing operating costs by £4m a year.
The fall in headcount followed the loss of 65 jobs in the fourth quarter of last year as part of a bid to slash annual costs by £5m.
However, Eurocell warned a deterioration in market conditions since its last update in July meant its full-year performance was expected to be below previous expectations.
It pointed to a “challenging market backdrop” with a “particularly severe” decline in new-build housing and reduced renovation, maintenance and improvement activity.
Chief executive Darren Waters said he expected second-half profit to benefit from lower input prices as well as the operational cost savings already secured through restructuring.
“However, with another base-rate increase implemented and the prospect of more to come further impacting upon consumer confidence, market conditions have deteriorated since the beginning of August, meaning that we now anticipate full-year performance will be below our previous expectations,” he said.
An ongoing strategic review was likely to identify further opportunities for growth and efficiencies, he said, and fthe irm’s pipeline remained positive.
Looking further ahead, he said he believed the UK construction market continued to have attractive medium- and long-term growth prospects, driven by the structural deficit in new-build housing and an ageing housing stock that required increased repair and maintenance.
“Overall, I believe the actions we are now taking leave the business well positioned to benefit from a recovery in our markets which will, over the medium-term, drive sustainable growth in shareholder value,” he said.
Elsewhere, Kettering-based building products firm Alumasc reported a pre-tax profit of £10.5m for the year to 30 June 2023, down by 12 per cent on the previous year, while revenue dipped by 0.3 per cent.
The firm saw a decline in export sales within its water-management arm due to a slowdown in activity in the Middle East, although its housebuilding-products and building-envelope divisions performed more strongly.
Chief executive Paul Hooper said the results demonstrated the group’s resilience and the benefits of a diversified products portfolio when faced with a tough market backdrop.
“We anticipate that short-term market conditions will remain challenging but are confident that we have undertaken the right actions to manage these, while positioning the group well for when markets normalise,” he said.