The Courier & Advertiser (Fife Edition)
Rollercoaster for Superglass after profits warning
Industry: Insulation manufacturer says return to profitability will be delayed
Scottish insulation manufacturer Superglass has said problems with the quality of supply of its principal raw material and a planned lowering of production volumes meant a return to profit would be delayed.
The AIM-listed firm saw shares plummet in early trading yesterday as investors reacted to the group’s latest update to the market.
The company, which is based at Thistle Industrial Estate in Stirling, had expected that earnings before interest, tax, depreciation and amortisation and exceptional items would move into positive territory in the second half of the current financial year.
However, the group yesterday warned that it no longer expected to meet that target.
A major turnaround plan is ongoing within the business and Superglass said it had undertaken a major capital investment programme during June and July in support of its “managed capacity reduction strategy” announced last autumn.
It said that during the course of the “complex capital project” it had taken the opportunity to make further improvements to operational infrastructure and production volumes in the period had been lower than anticipated as a result.
A major strand of the new strategy is a move away from lower margin markets at home and abroad, a move the company said meant sales volumes in the second half of the year would be in line with the first six months of the year.
Superglass also highlighted a significant issue with the consistency of its glass cullet supply – the main raw material it uses within its insulation manufacturing process.
It said it had made “substantial progress” with its cullet supplier but the problem was still to be fully resolved.
The firm said the combined impact of all of the issues meant a return to the black would be delayed, but it remained upbeat about its future prospects.
“The progress made in the second half will demonstrate the substantial improvement in the company’s financial performance over both the first half of the year and the equivalent period last year,” the company told investors.
“The board is increasingly optimistic that the combination of growing construction markets, the introduction of new higher value products, production efficiencies and tighter overall capacity supports a more positive outlook for price and margin improvement over the coming year.”
Shares in Superglass – which posted a £6.8 million loss in the last financial year – went on a rollercoaster ride in morning trading, at one point falling by a third before climbing back into positive territory by noon.
Shares eventually closed 0.25p up at 3.62p following yesterday’s session.