Eurocell plc Trading Update (1819K)

TIDMECEL

RNS Number : 1819K

Eurocell plc

12 December 2018

12 December 2018

EUROCELL PLC

(Symbol: ECEL)

Trading Update

Eurocell provides an update on its trading performance for the 11 months to 30 November 2018.

Trading and Operational Performance

We have continued to take market share and delivered strong sales growth throughout all areas of our business, with revenue for the 11 months to 30 November up 11% on last year (excluding acquisitions).

-- In the Profiles division, growth reflects a good performance from new build and trade fabricators alike, as well as the positive impact of new account wins.

-- In the Building Plastics division, growth is being driven by the increasing maturity of branches opened in the last two years. Like-for-like growth rates have also remained robust.

-- The mix changes we experienced in the first half have accelerated, with sales of co-extruded products in Profiles and foiled products in both divisions now well ahead of expectations.

Strong sales growth combined with significant mix changes has continued to impact negatively the efficiency of our manufacturing operations over the second half. As a result, the increased manufacturing and distribution costs identified in our 2018 Half Year Report continued into Q4.

Manufacturing efficiency has been improved through the following actions:

   --     An increase of 25% in new co-extrusion capacity, commissioned in H2 2018 
   --     Recruitment of additional trained labour resource in our foiling plant, also in H2 2018 
   --     Investment in new tooling for key products, with delivery in Q2 2019 

Separately, we have also experienced a significant increase in electricity prices in the second half, which has not yet been recovered through selling price increases.

Therefore, whilst we continue to expect progress in EBITDA in H2, this will now be at a lower rate than previously anticipated. As a result, we now believe Adjusted EBITDA for the year ended 31 December 2018 will be slightly below 2017.

Strategic Initiatives

We continue to make good progress with our key strategic initiatives, which include:

   --     Recycling - integration of Ecoplas (acquired August 2018) proceeding in line with our plans 
   --     Branch network - new management team has made an excellent start: 

- Ensuring a more consistent offering across the stores e.g. sales of made-to-order value added products through branches up 12% so far in 2018

- Expect 12 new branches in 2018, including the acquisition of Kent Building Plastics in December 2018 (4 branches)

In addition, given the possibility for raw material supply interruption due to Brexit, we have commenced a stock build programme, which will continue through the first quarter of 2019.

Refinancing

In December, we refinanced our unsecured, multi-currency revolving credit facility. The new GBP60 million facility (up from GBP45 million) is being provided by Barclays Bank plc and HSBC UK Bank plc and matures in December 2023. The new facility is competitively priced, with the margin payable and key terms remaining unchanged from the existing arrangements.

The increased flexibility provided by the refinancing, combined with the strength of our balance sheet, places us in a good position to deliver our strategic objectives.

Notice of Results

We will announce our preliminary results for the year ending 31 December 2018 on 15 March 2019.

Notes:

Eurocell plc is a market leading, vertically integrated UK manufacturer, recycler and distributor of innovative window, door and roofline PVC products.

Enquiries:

Eurocell plc

Mark Kelly, Chief Executive Officer

[phone]

Michael Scott, Chief Financial Officer

[phone]

Teneo

Ben Foster

[phone]

Camilla Cunningham

[phone]

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December 12, 2018 02:00 ET (07:00 GMT)