SafeStyle profits slip amid 'disruption' from new competitor

Safestyle on Thursday reported that it swung to a loss in 2018 as the business incurred litigation costs and "an unprecedented period of disruption and change" resulted in a drop in revenue.

The windows and doors manufacturer and retailer's annual revenue came in at £116.4m, a decrease of 27% compared to the year before, as the AIM traded company said its financial performance was "severely impacted" by the activities of "aggressive" new competitor NIAMAC Developments, which trades as SafeGlaze UK.

Non-underlying costs of £7.5m were also incurred, up from £1.3m, due to litigation, restructuring and a fine from the Health and Safety Executive following prosecution for an incident which occurred in March 2017.

Consequently, SafeStyle recorded a loss before tax of £16.3m, down from a profit before tax of £13.8m the year before.

Mike Gallacher, chief executive of SafeStyle, said: "The business faced a unique and challenging operating context in 2018, but I am pleased to say that, through the dedication and hard work of our people, we ended the year with our business stabilised and trading position materially improved."

In the last two months of the year, following a recovery contracted workforce numbers, the the company said it achieved an improved sales order intake that was in line with the comparative period for 2017, signalling a step-change in the performance seen for the majority of the year.

Sales order intake performance for the start of the year has sustained this momentum, representing what a statement from SafeStyle called "an encouraging start to the year".

"With many of the issues faced in 2018 behind us, our experienced management team is wholly focused on driving growth, improving margins and building on the underlying strengths of the business. We are the UK market leader, with a strong brand, industry leading production facilities and skilled people across the organisation. Whilst there is still much work to do, we look forward to the opportunities of the year ahead and returning Safestyle to profitability," said Gallacher.

Analysts from Liberum said: "Safestyle's new management has successfully stabilised the business and seen off the challenge posed by an aggressive new entrant in 2018. With most of the lost agents and staff now back at Safestyle, sales order intake stepped up at the end of 2018 and this has continued in the first quarter of 2019. Phase 2 of the turnaround plan will restore the group to profitability and provide a stable platform from which to restore revenue and profit growth from 2020."

SafeStyle's shares were down 0.36% at 70.10p at 1217 GMT.