While building materials group Epwin (EPWN) reported modest sales growth in its maiden half-year figures - it floated in July - operating profit more than doubled to £4.8m. That’s partly down to the non-recurrence of last year’s £1.7m reorganisation cost, which reflected the 2012 merger of Epwin with a collection of building products operations called the Latium businesses. But it’s also the result of improved efficiency, as higher volumes do not require much higher costs.
Indeed, operating margins at the window systems division (PVC-U windows) rose 1.4 percentage points to 4.4 per cent on the back of merger-related synergies. Revenues here grew 6 per cent, too, and management sees significant growth potential as ageing plastic windows - typically installed in the UK’s housing stock over 20 year ago - need to be replaced. The building components division (plastic roofline and cladding products) also saw a merger-driven efficiency boost: its operating margin rose nearly three percentage points to just under 10 per cent.
Operating profit at the building products unit (branded windows and doors), however, fell a third to £2.1m. Management says the business has benefited rather less from merger synergies so far, and that delivering operational efficiency is now the top priority. Epwin also sold the division's non-core retail-focused windows business Europlas in January.
Prior to these figures, broker Edison was forecasting adjusted full-year EPS of 10.9p (9.6p in 2013).
EPWIN (EPWN) | ||||
|---|---|---|---|---|
| ORD PRICE: | 108p | MARKET VALUE: | £146m | |
| TOUCH: | 108-110p | 12-MONTH HIGH: | 112p | LOW: 96p |
| DIVIDEND YIELD: | 1.3% | PE RATIO: | NA | |
| NET ASSET VALUE: | 30p* | NET DEBT: | 48% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p)† | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | 125 | 1.8 | na | nil |
| 2014 | 127 | 4.4 | na | 1.41 |
| % change | +2 | +144 | - | - |
Ex-div: 01 Oct Payment: 24 Oct *Includes intangible assets of £25.6m or 19p a share †Prior to flotation | ||||
