Margins are feeling the pinch at Eurocell (ECEL). The manufacturer, distributor and recycler of window, door and roofline PVC products said higher resin prices – up by 17 per cent over the 12 months – contributed to a 70 basis point reduction in gross margins to 51.4 per cent in the first half. A higher number of sales to large fabricators, as opposed to smaller customers, has also had a negative effect. That said, the decision to raise selling prices and increase the use of recycled materials in the group’s primary extrusion operations has helped mitigate the damage, leaving adjusted pre-tax profit (which excludes one-off costs) up 6 per cent to £11.3m.
Otherwise, the group remains on track to open 30 new branches this year, having opened half of these during the first six months. The operation of the main warehouse facility was brought back in-house – having previously been outsourced to DHL – during the period, while plans to expand the recycling facility will also prove necessary if the group is to keep up with rising stock levels.
Analysts at Peel Hunt expect pre-tax profit of £28.5m for the year ending December 2017, giving EPS of 22.7p, compared with £25.6m and 21.1p in 2016.
| EUROCELL (ECEL) | ||||
| ORD PRICE: | 224p | MARKET VALUE: | £224m | |
| TOUCH: | 223-225p | 12-MONTH HIGH: | 273p | LOW: 135p |
| DIVIDEND YIELD: | 3.9% | PE RATIO: | 11 | |
| NET ASSET VALUE: | 42p* | NET DEBT: | 50% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 97.2 | 10.3 | 8.4 | 2.80 |
| 2017 | 108 | 10.8 | 8.9 | 3.00 |
| % change | +11 | +5 | +6 | +7 |
| Ex-div: | 07 Sep | |||
| Payment: | 06 Oct | |||
| *Includes intangible assets of £20.2m, or 20p a share | ||||
