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Superglass Hldg PLC (SPGH)

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Friday 28 February, 2014

Superglass Hldg PLC

Trading Statement

RNS Number : 1616B
Superglass Holdings PLC
28 February 2014
 



 

 

Superglass Holdings PLC

("Superglass" or "the Company")

Trading update

 

Superglass Holdings PLC, the UK's leading independent manufacturer of glass wool and mineral fibre insulation solutions, today releases a trading update for the half year ending 28 February 2014.

 

The Company continues to experience very challenging market conditions due to continued weakness in the retrofit market, which is more than offsetting the encouraging signs in the new build housing and the repair, maintenance and improvement ("RMI") markets.  The uptake in insulation measures by households under the Green Deal remains very low.  This has been further compounded by the Government's announcement in the 2013 Autumn Statement to reduce the Energy Company Obligation ("ECO") and extend its duration to 2017.  On a more positive note, the Government's announcement contained a commitment to include low cost loft and cavity insulation measures under ECO and this is expected to be of material benefit to the Company in the next financial year.  The change to the ECO is now the subject of a consultation process which is unlikely to be concluded until the summer and is creating a further slowdown in activity in this channel.  As a direct consequence there has been no significant improvement in UK revenue in the first half.

 

To combat the weakness in UK demand, the Company has begun actively developing routes to Eastern European markets which, while less profitable than UK sales due to high transport costs, generate a positive contribution.  Overall exports now account for more than 15% of total volumes compared to 4% in the first half of financial year 2013.  In addition, the Company has been able to exit a restrictive distribution agreement on cavity wall insulation and this creates an opportunity to access the wider market. 

 

The cost saving programme is in line with management expectations.  The annual run rate of savings delivered has increased to £3.5m.  In addition, significant progress has been made in increasing the compression rates of our products, which will increase vehicle payloads and consequently reduce transport costs.   Overall, the Company expects to deliver an annual run rate cost saving of £5m by autumn of this year, which is the quantum originally targeted.  

 

First half trading has been impacted by a shortfall in UK sales volumes and resultant production outage to reduce stock levels.  Whilst second half trading is expected to benefit from additional sales volumes, higher sales prices, normalised production levels and a higher run rate of cost savings,   the overall trading performance of the business for the period, and for the full year to 31 August 2014, will be significantly below management expectations. There are no changes to management expectations for 2015. The Board still expects to return to positive EBITDA by the end of the second half of the year.  

 

The Company continues to trade with adequate cash headroom going forward and is expected to be generating cash on a monthly basis by the year end, although the cash balance at 31 August 2014 will be below original expectations.   The Board remains confident in the long term fundamentals for the business and remains firmly committed to delivering shareholder value.

 

The Company expects to announce its interim results on 30th April 2014.

 

ENDS

For further information, please contact:

Superglass Holdings Plc

Alex McLeod, Chief Executive Officer                               01786 451170

Chris Lea, Finance Director

 

N+1 Singer

Richard Lindley                                                              0113 388 4789

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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