Safestyle UK’s shares tum­ble after warn­ing

Dou­ble glaz­ing firm blames higher costs for prof­its hit

Yorkshire Post - Business - - FRONT PAGE - Ros Snowdon CITY ED­I­TOR @RosSnow­donYPN

Shares in Safestyle UK plunged over 20 per cent after the Brad­ford- based dou­ble glaz­ing firm is­sued its sec­ond profit warn­ing in three months.

The group blamed higher costs, send­ing its shares to an all time low. Shares in the com­pany slumped as much as 26 per cent in early trad­ing on the Lon­don Stock Ex­change be­fore clos­ing the day down 21.5 per cent at 39p.

The firm is now fore­cast­ing an un­der­ly­ing pre- tax loss and said rev­enue will be be­low mar­ket ex­pec­ta­tions for the year to De­cem­ber 31. The group said its gross mar­gins have been hit by higher dig­i­tal mar­ket­ing costs and sales com­mis­sions.

The re­tailer, which sells PVC win­dows and doors, has been strug­gling with a steady de­cline in sales vol­ume amid ris­ing in­fla­tion and fall­ing con­sumer con­fi­dence as home­own­ers rein in non- essen­tial spend­ing.

It has also been hit by new mar­ket en­trant SafeGlaze UK. The two firms, both based in Brad­ford, have become arch en­e­mies since Safestyle ac­cused its ri­val of “pass­ing off, the mis­use of con­fi­den­tial in­for­ma­tion, un­law­ful means con­spir­acy and ma­li­cious false­hood”.

Safestyle was forced to scrap its div­i­dend in April, when it said its 2018 rev­enue and profit would be sig­nif­i­cantly be­low mar­ket es­ti­mates.

It has also seen man­age­ment changes in re­cent months as chair­man Peter Richard­son re­signed shortly after as­sum­ing the role.

For­mer Mars ex­ec­u­tive Mike Gallacher joined as Safestyle’s chief ex­ec­u­tive in May, tak­ing over the post from Steve Birm­ing­ham.

The com­pany said its or­der in­take has im­proved in re­cent weeks, but is still at a lower level than ex­pected. Pric­ing re­mains firm after the com­pany in­tro­duced price in­creases.

Safestyle also forecast £ 6m in one- off costs this year.

How­ever, it ex­pressed con­fi­dence in its medium and longterm prospects as it ex­pects ma­te­rial an­nual sav­ings from its cost sav­ings pro­gramme.

An­a­lyst Char­lie Camp­bell at Liberum said: “Safestyle’s trad­ing up­date con­tains the good news that or­der in­take has now sta­bilised fol­low­ing dis­rup­tion from a very ag­gres­sive new mar­ket en­trant, and that staff num­bers are now start­ing to be re­built.

“The bad news is that ac­tiv­ity lev­els are at a lower level and mar­gins have suf­fered more than orig­i­nally ex­pected.

“This has led us to re­duce ex­pected pre- tax profit from a £ 4m profit to a £ 3m loss, but we are con­fi­dent in new man­age­ment’s abil­ity to re­store prof­its.“

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