Airea Share Discussion Threads

[trigger blade] 07/9/2021 08:38

I agree bda3490, the companies are not comparable. It would make more sense to do a comparison with other manufacturers, VCP for example who reported final results recently and JHD who are about to do so.

I’m not in VCP, but at a glance, their share price has quintupled in the last 18 months, they must be doing something right!

[bda3490] 03/9/2021 15:00

I think in terms of read across it’s like chalk and cheese . The uk commercial and residential sector is booming. Europe is doing well

Airea is not !

When was it ever different ! I remember the big excitement of buying Ryalux - domestic carpet and a when known name . Airea lauded finally closing it a couple of years ago. Let’s face it when you have 1 2% market share you can’t moan about the economy or the whole market because you can treble in size whilst the big players are sweating buckets.

[illiswilgig] 02/9/2021 15:40

H1 results for Headlam this morning. I've not read them in detail but skimmed the eseful write up of the highlights on Stockopedia.

It srruck me that there might perhaps be some useful read across to whats happening with AIEA which prompted me to take another look at their H1 performance.

Headlam confirms that their performance in H1 21, about the same as H1 19 levels – is primarily down to residential (carpet) outperformance +4.7%. Whereas commercial (tiles) remains subdued -12.8%. They further comment that commercial revenue has been recovering and in June21 was only -3.2% off 2019 levels. But that July and August softened but not substantially.

Headlam - Mcap £440m and H1 revenue £330m - is primarily UK based (85%) distributor, not a manufacturer, and does have operations though owning businesses in other European countries.

How does this read across to Airea’s recent H1 report which was typically brief and terse? Perhaps the most downbeat that I can remember. But these are not normal times, whatever normal was? Anyway I’ll try to have a look – warning this turns out to be a bit longer than I’d anticipated.

Airea had 2021 H1 revenue of 7.4m (versus 7.1m H1 2020) and tells us UK sales were up 18.8% whilst exports fell 35%. Unfortunately they didn’t tell us how this relates to H1 2019 – but then they never do.

I’ve tried to estimate what Airea’s UK and Export split would likely have been in 2019 and in 2021 from the splits in the notes to the annual report.

In FY 2019 (2018 was very similar) UK rev was 74% and given the similarity with 2018 it seems reasonable to assume the same for H1 then UK rev was 74% of H1 8.89m or 6.62M

In FY 2020 the UK % of revenue had risen to 79% but that’s not a huge shift given everything else that went on in 2020? H1 is composed of a virtually unaffected ‘good’ Q1 and a locked down Q2, so I’ll just take the same 74% for H1 2020 which gives
Total Rev 7.1m
UK Rev 5.25m
Exp Rev 1.85m

For H1 2021 we know that UK revenue increased by 18.8% over FY20 whilst exports decreased by 35% over 2020 and applying that to my estimated 2020 split gives

UK Rev 6.2m
Exp Rev 1.2m
Total Rec 7.4m

which by some contrivance appears to be the same as the H1 2021 total revenue which might offer some comfort that my figures are not too far off?

What was the point of all this? Other than as therapy to cope with the effects of long-covid on my addled brain? Oh yes, now I can estimate how far Airea is from the 2019 H1 splits (assuming my estimates are reasonable)

Uk Rev 6.2m (2021) 6.62m (2019) -6.3%
Exp Rev 1.2m (2021) 2.27m (2019) -47.2%

Airea is essentially 100% a commercial flooring manufacturer. Comparing Airea’s -6.3%(UK) on 2019 levels it actually comes out better than Headlam’s -12%? Though that is more than lost by the -47.2% fall in exports relative to 2019.

What’s up with exports? In the last 6 months its become apparent that small exporters with no infrastructure in European countries have fared worse than larger companies with infrastructure and companies setup in Europe. It seems likely that some European companies have chosen not to do business with UK exporters, or to postpone decisions until the export situation and logistic problems compounded by the pandemic are largely cleared. Under these circumstances it seems reasonable to assume, as Airea have stated, that exports will only return slowly.

What do I conclude?

All credit to Airea for their good UK sales. Unfortunately they will need to keep growing UK sales at least as fast to make up for lost export sales. It’s not impossible. If their sales have continued to recover like Headlams commercial sales then their continued focus upon new designs and product launches should help as will the investment in new machinery. But it’s a nasty headwind to battle alongside the price rises and material shortages if export sales are not recovered. In the short term it seems unlikely that total sales will miraculously recover but in the medium term led by new product launches it seems likely that UK sales will continue to grow strongly and export sales recover.

Could be a couple of years wait for that though – and there is an opportunity cost to consider stacked up against other current opportunities? So it’s a hold for me at the moment.
This is not advice, just my opinion, and my figures could be wrong – so please do your own research.

cheers

[bda3490] 18/8/2021 20:00

I read that jhd uk sales were well up and not on last years covid affected results but the year before. Headlam as the main uk flooring distributor is also saying market expectations to be beaten by 20%. I think selling at the 70p Mark like the ceo did was a smart move. The market for sales seems well up and Airea hasn’t exactly got a market share that can be that big. The words plot and lost spring to mind. Oh and Victoria carpet plc say the uk is buoyant

[partridge1948] 05/8/2021 10:50

I agree. Hold both and wish that JHD would put we AIEA holders out of our misery by buying it from spare cash earning little or nothing in interest.

[3800] 04/8/2021 12:17

I think the difference between AIEA and james halstead is the management. I sold all my shares there when a director got the company to buy back his at the top of the market. I certainly didn't get no where near the price he did but was just glad to be out.

[arregius] 04/8/2021 11:21

I agree, they have a wider offering and hence did well. AIEA mentioned UK recovering but very lightly. the should have given more detail on that. Lets see

[illiswilgig] 04/8/2021 08:42

Interesting to read the James Halstead (JHD) Trading Statement this morning - with lots of read across from the recent AIEA statement?

'In the UK, the availability of basic raw materials has continued to threaten smooth production'

'It is apparent that the entire market has faced production issues and several of our competitors have had to suspend production due to material shortages. To date, we have not curtailed output and we believe this has helped us gain market share'

though its not all bad

'our commercial flooring offerings (particularly in luxury vinyl tile) were used increasingly and significantly in domestic settings.'

'big increase in online retailing of flooring where, again, our strong brands aided growth. Both factors contributed to our expansion in the domestic UK flooring market, where demand increased not just because of rising consumer spending on the home but also with the move to home/garden offices and home gyms'
'
and Halsteads expected results are in stark contrast with expectations at Airea?

'the Company expects to report both turnover and pre-tax profit at record levels for the period.'

It seems that Airea is experiencing many of the same problems but without, as yet, seeing any of the benefits?

cheers

[illiswilgig] 31/7/2021 12:07

The price held up surprisingly well through yesterday despite the high volume (almost 300,000 shares trades - against 17000 average) - I can understand the selling, but who was buying? And why?

cheers

[bda3490] 31/7/2021 10:35

Just checked 2019 interims it was £8.9 m turnover this years “up against last year” was £7.4. I’m all for trying to make a positive statement but most companies are referring to the year pre pandemic.

[bda3490] 30/7/2021 13:21

Worse than last year when there was a national lockdown
Headlam is flooring and they announce near record profit 20% ahead of market expectations and a return of full dividend

Not a good set of figures even through a Yorkshire filter

[illiswilgig] 30/7/2021 13:21

Who else noticed the Chairmans use of the word 'exciting'?

As in

'our new exciting product development programme.'

cunningly hidden just before the outlook section.

cheers

[illiswilgig] 30/7/2021 11:32

Ouch!

Bit of a shock at first glance. Probably the most depressing, downbeat and glass-half-empty commentary that I have recently had the pleasure of reading. Irrational exuberance it is not.

Then I realised that I don't have my Yorkshire (Trouble t'Mill) filter on and a quick look back reveals that the chairman is not given to bouts of euphoria.

There is never a lot of information at the interims - so not much to go on.

After a short lie down I checked my estimates and the sales figure is clearly disappointing, slightly up on the prior year and essentially flat on the previous 6 months. Unfortunate that the +18.5% increase in UK sales is obscured by the 35% fall in exports, primarily to Europe.

I am suprised to find that the operating profit and eps are above my expectations 1.14p vs my pencilled in 0.8p eps. Though it appears that operating margin has declined slightly from H2 - but not by much and the big question is clearly how much further will this fall under material cost inflaction and flat or even declining pricing environment.

I rather suspect that some of the downbeat commentary is aimed at supporting the decision to pass on an interim dividend, no doubt to the disappointment of many long term shareholders.

The hope is clearly that the £1.2m spent on new machinery improves efficiency and the new design launches give them some ability to pass on price increases.

All the same I can see a tough few momths ahead so I've reduced my estimates on H2 to similar operating profit and eps to H1 as an increase in turnover is balanced out by falling margin. Hopefully that will prove to be conservative - and pricing pressures will abate in a few months, but I have my doubts.

I was impressed by the cash generation and the sudden invisibility of the pension deficit and resulting increase in NAV. Intriguing?

In the meantime there is not much to do other than lie down and attempt to ignore the share price gyrations for the next 6 months or so.....

cheers

[arregius] 30/7/2021 10:41

Why is Neil never commenting on results? There is always chairmans statement

[mesquida] 30/7/2021 10:15

Yes Arregius , very good news indeed on the pension deficit/surplus,in fact i am surprised that it did not merit a comment in the statement.

[irenekent] 30/7/2021 09:16

Oh dear. Not great.

[multibagger] 30/7/2021 07:39

Good morning all

......the outlook is pretty tersely worded unfortunately so won't be surprised to see sub 30p today.


..."Outlook

The UK sales recovery is expected to continue with a strong order book, however the impact of lifting lockdown restrictions is unknown and so forecasting sales performance in the second half is particularly difficult. Market activity in our European Markets is expected to improve but relatively slowly. Difficulties exporting to Europe are now well documented, with significant increases in cost and additional complexity in exporting to Europe Post-Brexit.

Of greatest concern is the level of raw material price inflation and supply chain tensions putting a strain on the availability of materials and the costs of obtaining them, the increases experienced to date are relentless and unprecedented. Key to our success will be our ability to pass on these price increases and a halt or reversal of current pricing trends.

We have however continued to invest in development of our product range with investment in new equipment and the launches of new products ongoing throughout 2021 based upon our confidence in the future prospects of the business and our secure financial position.

Given the financial performance of the group and the continued levels of uncertainty in the market and wider economy the group will continue to prioritise cash to ensure medium to long-term stability and therefore will not be proposing an interim dividend (2020: nil).

MARTIN TOOGOOD

Chairman 30th July 2021...."

[arregius] 30/7/2021 07:38

There you go.Interims out.Net assets 17m.Investments continue with 1.2m spent in plant and equipment.Uk recovering although overall commentary is depressing lol.Very good news in the pension surplusAiea is now trading below NAV

[arregius] 28/7/2021 08:06

Outlook is key, and with a solid balance sheet i am very happy sitting and adding here

[illiswilgig] 28/7/2021 07:59

Ah. I think I mis-spoke. I am looking forward to getting some numbers and finding out what is going on. Not that I am expecting 'good' results.

I would be happy with good progress at this stage, but better to know one way of the other,

cheers

[bda3490] 28/7/2021 05:07

Can’t see that results will be any good. Shares have had a good run lately but I think reality is not good

[illiswilgig] 26/7/2021 08:12

No I don't know.

Based upon the last three years.

2020 - 30th July
2019 - 2nd August
2018 - 17th August

I'd agree with your 'must be anytime now'

though I'd speculate it will be later this week or the start of next week.

Looking forward to it - it's been a long time with no news and nothing to update my forecasts,

cheers

[arregius] 26/7/2021 07:51

Anyone know when results are due? Must be anytime now

[arregius] 09/7/2021 08:02

We wont stay this low any longer my guess. Hopefully a good update and div re installment