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Has Safestyle bottomed out?

The windows and doors specialist has had a terrible summer, but the worst may be over
September 22, 2017

A disappointing set of half-year numbers has sealed a disastrous summer for windows and doors seller Safestyle (SFE), which issued two profit warnings within two months. But the good news is that trading conditions and orders stabilised in July and August (compared with a 6.8 per cent decline in the volume of frames installed in the first half), and while chief executive Steve Birmingham is reluctant to predict a wider market recovery, City analysts suspect the worst might be over.

IC TIP: Hold at 200p

Market forces aside, the company admits it has to whip itself into shape. The amount spent on marketing and paid to third-party finance providers must be better managed, says Mr Birmingham, although the recent recovery in the pound could ease the pressure on input costs.

Still, further price increases are likely in FY2018 following the hike in January, which pushed unit prices up by an average of 8.3 per cent to £599, excluding VAT. Replacing the group’s sales director marks the first step in overhauling the end-to-end commercial process, specifically how much data is collected and used to drive new customer leads.

Analysts at N+1 Singer expect pre-tax profits of £16.5m and EPS of 16.2p for the year ending December 2017 (from £20.5m and 19.9p in 2016).

SAFESTYLE (SFE)   
ORD PRICE:200pMARKET VALUE:£166m
TOUCH:197-200p12-MONTH HIGH:325pLOW: 145p
DIVIDEND YIELD:5.6%PE RATIO:11
NET ASSET VALUE:47p*NET CASH:£17.7m
Half-year to 30 JunTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201681.49.59.43.75
201782.58.88.33.75
% change+1-8-12-
Ex-div:28 Sep   
Payment:06 Nov   
*Includes intangible assets of £21.8m, or 26p a share