Safestyle suffers ‘severest contraction’ of the market
Window and door manufacturer Safestyle has seen profits before tax drop to from £9.5m to £8.8m because of the “severest contraction” in the market in nearly a decade.
The Bradford-based company reported its interim results to June 30, in which CEO Steve Birmingham said: “The first half of 2017 was an increasingly challenging market however Safestyle increased revenue and market share albeit at a higher cost than historically. As a result, we have experienced a decline in profits in what was the severest contraction of our market since 2008/09.”
The firm saw the volume of frames installed decrease by 6.8% to 139,612 , down from 149,742 in 2016. Gross profit reduced by 2.5% in the period to £27.5m (2016: £28.2m). However, revenue was up 1.4% to £82.5m (2016: £81.4 m).
FENSA statistics show the rate of market decline in H1 2017 accelerated from a Q1 reduction of 2.4% to 17.2% in Q2.
The firm said that a significantly steeper rate of decline has continued into the first two months of Q3 and this was expected to continue throughout 2017. The report added: “Our response has been to protect revenues and gain market share, which now stands at 11.2% at 30 June 2017, which has increased the costs of lead generation and conversion into orders.”
Order intake was up 1.8% for the first six months of the year. Underlying EBITDA was down 11.7% at £9.8m. The group’s balance sheet has cash of £17.7m at 30 June 2017 (£13.5m on 31 December 2016).
In the period, Saftestyle opened a new installation depot in South Wales and completed a new factory extension at Wombwell in South Yorkshire. Safestyle also experienced an 8.3% growth in the average unit price from £553 to £599 ex VAT.
Chairman Mr RS Halbert said:”Our expectation is that the market will continue to be weak for at least the remainder of 2017. Consumer confidence has declined, and our outlook is therefore cautious.”
He added that Safstyle have continued to evolve the business and in the period further developed brand messaging, invested in infrastructure, and continued to develop the conservatory replacement offer and product range.
Halbert said: “The sharp decline in our market has created a number of challenges and opportunities, and we have chosen to protect revenue despite the associated increased costs of lead generation and providing customer finance.
“We have seen a steady increase in the proportion of customers taking up our promotional finance offers with no deterioration in acceptance rates. Longer term, we continue to regard the potential for enhanced RMI expenditure by the homeowner to be positive, notwithstanding the short term weakness caused by the current uncertain economic outlook for consumers.”
