Strip out £3.3m of IPO costs and Eurocell (ECEL) delivered an impressive 35 per cent increase in adjusted pre-tax profits in its maiden results as a listed company. Revenues were flat in the six months to June, but gross margins rose 4.2 percentage points as the manufacturer of precision PVC windows and doors lowered scrap levels, benefited from cheaper material prices and booked a £1.9m saving on a resin procurement contract.
While the repair and maintenance market remained tepid, Eurocell benefited from the strong underlying demand for new homes in the UK. The group's sales to the new-build housebuilding sector comfortably beat wider market growth of 11 per cent. The expanding network of branches - the total has grown by 10 to 138 so far this year - is supporting increasing sales of higher-margin made-to-order products.
Given that Eurocell was in private-equity hands until March, it is reassuring to see further strong improvements in working capital. Cash generated from underlying operations increased by 34 per cent to £12.2m, with underlying cash conversion up from 80 per cent to 93 per cent.
Broker Peel Hunt is forecasting adjusted pre-tax profits of £24m and earnings per share of 19.1p for 2015, up on equivalent figures of £17.8m and 12.6p in 2014.
EUROCELL (ECEL) | ||||
|---|---|---|---|---|
| ORD PRICE: | 203p | MARKET VALUE: | £203m | |
| TOUCH: | 203-206p | 12-MONTH HIGH: | 215p | LOW: 175p |
| DIVIDEND YIELD: | 1.3% | PE RATIO: | 18 | |
| NET ASSET VALUE: | 18p* | NET DEBT: | 185% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 83.1 | 7.3 | 5.5 | nil |
| 2015 | 82.5 | 6.3 | 4.6 | 2.7 |
| % change | -1 | -14 | -16 | - |
Ex-div: 10 Sep Payment: 9 Oct *Includes intangible assets of £13.9m, or 13.9p a share. | ||||
