Epwin Group flags stable first-half performance

Energy-efficient and low-maintenance building products manufacturer Epwin Group reported a stable first-half performance on Tuesday, with underlying operating profit in line with both the strong prior year comparative and the board’s expectations.

The AIM-traded firm said that despite subdued demand in the new build and repair, maintenance, and improvement (RMI) markets, it had effectively managed the balance between volume and margin, resulting in operating margins ahead of the prior year.

Revenue for the first half was slightly behind the prior year, reflecting lower PVC input prices, which led to a reduction in previously-levied surcharges, and the broader sectoral slowdown.

Excluding surcharges, underlying turnover was down 8% compared to the first six months of 2023, but only 2% below the second half of 2023.

Epwin said its financial position remained robust, with covenant net debt standing at £19.5m as of 30 June, equivalent to 0.6x adjusted EBITDA.

That followed the payment of a £4m final dividend and the repurchase of £3.3m worth of shares under its buyback programme.

The group said it retained over £55m of headroom on its facilities, positioning it well to pursue strategic objectives, including value-enhancing acquisitions.

Epwin said it continued to return capital to shareholders through both its dividend policy and share buyback programme, with the initial buyback programme, completed in April, extended by an additional three million shares, of which 2.7 million were repurchased to date at a cost of £2.4m.

The board said it expected the extended programme to be completed by 30 September, although there was no guarantee it would be fully executed.

Looking ahead, Epwin remained confident in delivering underlying operating profit for the full year in line with market consensus expectations.

The group said its broad product range, diverse customer base, and strong balance sheet provided resilience against short-term market fluctuations.

Long-term market drivers remained positive, including the UK's ongoing housing shortage, the need for improved social housing, and increasing legislative pressures to decarbonise and enhance the energy efficiency of UK housing stock.

“Trading in the first half was consistent with the Board's expectations with underlying profit in line with a strong 2023 comparative, in what continue to be challenging markets,” said chief executive officer Jon Bednall.

“We remain confident of achieving our full year expectations, with a further year of profit progression, and have a positive view of our future prospects despite the short-term macroeconomic headwinds.

“Looking further ahead, the medium and long-term drivers for the Group's products remain positive.”

Epwin said it would announce its results for the half-year ended 30 June on 11 September.

At 1309 BST, shares in Epwin Group were up 4.6% at 91p.

Reporting by Josh White for Sharecast.com.