100 jobs gone as manufacturer issues profit warning

Eurocell, the South Normanton-based manufacturer of PVC windows, doors and roofline products, has issued a profit warning amid what it is calling a “challenging market backdrop”.

Revenues at the firm for the first half of the year were down 2% to £184.4m, while adjusted profit before tax for the period fell by over 62% to £6m.

Eurocell says that a “severe” decline in new build housing is behind the poor performance. The firm made job cuts of around the 100 mark at its Derbyshire plant in the second quarter of this year. Axing the roles will save the firm £2m in the second half of 2023 and £4m a year from 2024 onwards.

A spokesperson for Eurocell told TheBusinessDesk.com that no more job cuts will be made.

Darren Waters, chief executive of Eurocell, said: “As expected, H1 profits were down on the prior period. Lower market volumes have resulted in an increasingly competitive environment and margin pressure in the branch network. First half profits were further impacted by recycling feedstock prices, which were significantly higher than H1 2022.

“With the decline in market volumes and a tough outlook for the balance of 2023 and 2024, we acted quickly to lower operating costs and focused on efficient working capital management. In addition, we continue to seek operational efficiencies, for profit and cash flow improvement, the benefits of which we should start to see next year.

“We anticipate that profits in H2 will benefit from lower input prices as well as the operational cost savings already secured. 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.

“On becoming CEO in May, I initiated a review of our strategy, including the future size and shape of the branch network, customer proposition and other business structures, and I expect this will identify more opportunities for growth and efficiencies. In addition, our pipeline for new fabricator account wins remains positive, supported by a net reduction in UK capacity following the announcement that Duraflex intends to exit the market in September.”

“Looking further ahead, the UK construction market continues to have attractive medium and long-term growth prospects, driven by the structural deficit in new build housing and an ageing housing stock that requires 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.”