Eurocell reports robust H1 2024 performance amid challenging market conditions
Eurocell PLC, a leading UK manufacturer and recycler of PVC products, has posted a 33% rise in adjusted pre-tax profit for the first half of 2024, despite a 5% drop in sales compared to the same period last year. The strong performance was driven by proactive margin management and a reduction in input costs, including electricity and recycling feedstock.
In its Half Year Report for the six months ending 30 June 2024, Eurocell announced profits of £8 million, up from £6 million in 2023, despite subdued volumes in both the residential maintenance and new build housing markets. While revenue fell to £175.7 million from £184.4 million, Eurocell’s management focused on reducing costs, allowing the company to maintain strong shareholder returns through dividends and share buybacks.
The company attributes the profit growth to strategic initiatives, including a reduction in overheads and increased operational efficiency. Chief Executive Darren Waters highlighted that the ongoing macroeconomic uncertainty, compounded by adverse weather and the upcoming General Election, has led to cautious customer spending in home improvements. He stated: “Trading conditions continue to be tough in 2024, with ongoing macroeconomic uncertainty impacting our key markets, exacerbated by wet weather and the General Election. Customers remain cautious, resulting in lower investment in home improvements and subdued activity levels in the residential construction market. As a result, H1 sales were 5% below H1 2023.
“However, first half adjusted profit before tax was up 33% on H1 2023, as we continue to proactively manage our gross margin and cost base, which has supported a reduction in input cost pricing, and our expectations for the full year remain unchanged.
“Earlier this year we launched our new strategy, which identified a pathway to building a £500 million revenue business, generating a 10% operating margin, over a five-year period. We have good early momentum with our new strategic initiatives and are becoming increasingly confident that, whilst this is an ambitious target, it is achievable.
“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, we believe the progression of our strategy, together with the actions we have taken on cost and cash flow over the last eighteen months, leave the business well positioned to drive sustainable growth in shareholder value.”
Eurocell has also made progress in sustainability, with recycled material now accounting for 33% of its production, up from 32% in 2023. The company’s commitment to long-term growth remains intact, with plans to expand its branch network and continue to invest in new product offerings, including windows, doors, and garden rooms.
As Eurocell looks ahead to the second half of the year, it remains confident in its ability to navigate a challenging market while continuing to drive value for its shareholders.
