Epwin Group reports strong second half

The AIM-traded building products company said second half devenues were 4% higher year-on-year, with underlying operating profit for the six month period coming in at £11.2m, compared to £11.8m a year earlier.

Overall, the company reported revenue of £241m for the year ended 31 December, down from £282.1m, while its full-year underlying operating profit was more than halved to £9.4m from £21.2m in 2019.

Adjusted earnings per share came in at 3.99p, compared to 10.29p a year earlier, while the board recommenced the dividend with a final dividend per share for the year of 1p, down from dividends of 1.75p in the prior year.

Net debt excluding IFRS 16 leases widened to £96.9m from £80.4m, with underlying operating cash conversion for the year standing at 252%, compared to 164% in 2019.

Demand from the repair, maintenance and improvement (RMI) market was quicker to return, the board said, and stronger than newbuild and social housing.

Epwin said it had “significant” headroom in its banking facilities of more than £50m at year-end, with its facilities now extended to June 2024.

All pre-Covid banking covenants had been met, with no variations or waivers, and the directors noted that no additional funding had been sought from shareholders or banks.

The company said the second half recovery had continued into 2021 with stronger-than-anticipated demand across most of the business in the first quarter, as revenues in the first three months were ahead of both 2020 and 2019.

Supply chains had been, and continued to be, under pressure, however, as a result of the pandemic and the subsequent acceleration of demand.

The firm said its PVC raw materials supply remained under pressure, with shortages from global events driving up the price of resin “significantly” to all-time highs.

Steps were being taken to recover those costs in the market in an “equitable” way.

Epwin said it was reviewing opportunities to accelerate capital expenditure following the 'super deduction' announced in the March budget, and said potential merger and acquisition opportunities were emerging.

“Our performance this year and the strong underlying demand from our markets have been encouraging against the backdrop of the disruption caused by the pandemic,” said chief executive officer Jon Bednall.

“Despite the continued uncertainties in the wider economy, we look forward to a more positive 2021.

“With a strong balance sheet, buoyant demand and robust operations supported by the medium and long-term drivers of our markets, we will refocus our efforts on delivering on our strategic priorities for the business and our shareholders.”

At 1449 BST, shares in Epwin Group were down 2.2% at 94.67p.