Like any business, Epwin (EPWN) strives to build operational efficiencies, but the building products manufacturer – a cyclical game if ever there was one – is hostage to external factors. Pundits say we’re nearing the end of the economic cycle, yet a first-quarter 2019 trade survey from the Construction Products Association (CPA) revealed a net balance of 46 per cent of manufacturers experiencing a rise in sales during the quarter, although the CPA also warned of a noticeable slowing in investment in new buildings and plant.
The macro challenges are to come, but financial performance suffered through 2018, as Epwin lost the business of its two biggest clients in the second half of 2017. Further disruption ensued following the decision to exit its newbuild window fabrication operations in Cardiff, effected midway through last year. The underlying operating margin, disregarding divestments and amortisation charges, fell 160 basis points to 6.7 per cent, while related profits fell by 23 per cent to £18.7m.
Bloomberg consensus gives cash profits of £27.7m, leading to adjusted EPS of 10.2p, rising to £29.4m and 11.2p in 2020.
| EPWIN GROUP (EPWN) | ||||
| ORD PRICE: | 73p | MARKET VALUE: | £ 105m | |
| TOUCH: | 72.4-74.4p | 12-MONTH HIGH: | 91p | LOW: 66p |
| DIVIDEND YIELD: | 6.7% | PE RATIO: | 10 | |
| NET ASSET VALUE: | 63p* | NET DEBT: | 28% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2014 | 260 | 18.6 | 11.8 | 4.24 |
| 2015 | 256 | 18.6 | 11.3 | 6.37 |
| 2016 | 293 | 23.0 | 13.9 | 6.60 |
| 2017 (restated) | 293 | 13.9 | 8.1 | 6.69 |
| 2018 | 281 | 13.3 | 7.6 | 4.90 |
| % change | -4 | -4 | -7 | -27 |
| Ex-div: | 9 May | |||
| Payment: | 3 Jun | |||
| *Includes intangible assets of £73.7m, or 52p a share | ||||
