Profit warning at Safestyle as recovery proves slower than expected
Safestyle has said it is “cautiously optimistic” about its turnaround plans, but warned that profits this year will be lower than expected.
The Bradford-based listed company said the slow improvement of profit margins was down to higher lead generation cost and the slower-than-expected pace of “improving the group’s operational effectiveness”.
Revenues will reportedly be in line with current market expectations.
In March the company reported pre-tax losses of £16.3m for the year to 31 December 2018 compared to a profit of £13.8m the year before. Revenues dropped by 27% from £158.6m in 2017 to £116.4m.
The PVCu window and door manufacturer said that while “elements of consumer demand do appear to be soft” the market saw growth in the first four months of the year.
Safestyle said it expects to grow its revenue by 10% in the first half of this year, and revenues in the second half to be 20% above comparable periods last year. It said it expects to deliver “material improvement” in its operating margin, and is addressing the high cost base of the business.
Alan Lovell, chairman of Safestyle UK plc, will say at the AGM today: “Following the progress made during H2 2018 in stabilising the business, phase two of our turnaround plan is now well underway.
“Our focus for phase two continues to be on recovering volumes and market share, restoring our operational effectiveness, reducing our costs and enhancing our margins.
“We remain on track to conclude this phase at the end of 2019 and then plan to move into phase three in 2020 which has a primary focus on accelerating our growth.
“The board remains focussed on delivery of the three stage turnaround plan and is cautiously optimistic about achieving a strong exit rate this year to set the Group up for a further step-up in its profit delivery in 2020.”