A fairly stagnant home improvement market, not helped by last summer's Brexit vote, didn't pose much of an issue for Eurocell (ECEL) in 2016. The maker of windows, doors and roofline PVC products grew sales by a respectable 11 per cent, if you exclude contributions from Vista Panels, the door specialist it acquired for £6.3m last March.
Self-help measures, including the expansion of the group's branch network and focus on drumming up demand for niche energy-efficient lantern and tiled conservatory roofs, played a key role in this success. The depreciation of the pound pushed up the price of resin, although Eurocell compensated for the inflated costs of this core material by hiking its own prices and delivering various manufacturing efficiencies.
On the flipside, increased investment and higher-than-expected logistics expenses from its five-year outsourcing contract with DHL caused the operating margin to tighten by 160 basis points. Management says its initial assumption that the DHL deal would lower warehouse costs and deliver £1.3m in annual savings turned out to be too optimistic. In February 2017, it brought its main facility back in-house, adding that good customer service levels had been maintained during the transition.
Broker Peel Hunt is forecasting adjusted pre-tax profit of £28.5m and EPS of 22.9p in 2017 (up from £25.6m and 21.1p last year).
| EUROCELL (ECEL) | ||||
|---|---|---|---|---|
| ORD PRICE: | 203p | MARKET VALUE: | £203m | |
| TOUCH: | 200-208p | 12-MONTH HIGH: | 205p | LOW: 134p |
| DIVIDEND YIELD: | 4.2% | PE RATIO: | 10 | |
| NET ASSET VALUE: | 38p* | NET DEBT: | 53% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 173 | 16.7 | 11.9 | nil |
| 2015 | 176 | 19.7 | 15.5 | 7.9 |
| 2016 | 205 | 23.8 | 19.6 | 8.5 |
| % change | +16 | +21 | +26 | +8 |
Ex-div: 27 Apr Payment: 24 May *Includes intangible assets of £19.7m, or 20p a share | ||||
