Eurocell Plc · LSE:ECEL
Eurocell — H1 2023 Earnings Presentation
29 slides from Eurocell's earnings presentation, Sep 28, 2023
Slide 1: Eurocell Plc 2023 Half Year Results
EUROCELL PLC 2023 Half Year Results
Slide 2: Agenda and Presenters
Agenda Presenters Overview Darren Waters Chief Executive Officer Business Update Michael Scott Chief Financial Officer Financial Review Summary and Outlook 1
Slide 3: Overview
Overview Revenue Darren Waters – Chief Executive Officer £184.4m ▼ 2% H1 2022 Financial results in the short term impacted by weak market backdrop Profit before tax Early and decisive action on cost in response to lower volumes £6.0m £15.7m H1 2022 Efficient working capital management driving good c
Slide 4: Market Backdrop
CPA Construction Products Industry Forecasts 2023-25 (1) Market Backdrop Private housing RMI growth Weak RMI and New Build Markets 21% 19% ► Challenging market backdrop 9% 5% - Reduced RMI activity 2% • Weak consumer confidence, reflecting higher cost of living and interest rates • Home-owners pulli
Slide 5: Management Actions
Management Actions Focus on Costs and Cash Flow Inventory as a % of LTM Cost of Sales 40% ► Early action on costs in response to continued market deterioration 36% - Disposal of Security Hardware in Q4 2022 32% - Restructuring in Q4 2022 • Reduced operating costs by £5m per annum from the start of 2
Slide 6: Input Costs and Margin
Input Costs and Margin Virgin resin and Recycling Feedstock prices (indexed) Impact of Lower Volumes and Inflation 300 250 ► Persistent input cost inflation, particularly labour and electricity - Continuing to recover via selling prices and surcharges where possible 200 - Progressive forward energy
Slide 7: Innovation
Innovation New Product Development ► Increasing strength in product innovation - Recent successful product launches include: garden rooms, updated conservatory roofs range and flat aluminium roof lantern ► EurXtension system launched in August 2023 - Combines existing Eurocell products with design i
Slide 8: Financial Highlights
Financial Highlights Michael Scott – Chief Financial Officer Revenue Adjusted profit before tax Net cash from operating activities £184.4m £6.0m £20.9m ▼ 2% H1 2022: £188.8m ▼ 62% H1 2022: £15.7m ▲ 15% H1 2022: £18.1m Net debt (pre-IFRS 16) Adjusted earnings per share Interim dividend £15.2m 4.3p 2.
Slide 9: Financial Performance
Financial Performance Group Income Statement H1 H1 ► Action on costs in response to lower volumes £m Change 2022(1) 2023(1) - Restructuring in Q4 2022 reduced operating costs by £5m Revenue 188.8 184.4 ▼ 2% per annum from the start of 2023 Gross profit 95.8 84.8 - Restructuring in Q2 2023 reduced op
Slide 10: H1 Sales
H1 Sales Some Resilience in Weak Market Conditions 190 188.8 (3.6) Total sales ▼ 2% (5.3) 185 4.5 184.4 £m 180 175 H1 2022 Profiles volume Building Plastics volume Sales price increase and H1 2023 surcharges ► Sales ▼ 2% vs strong comparative period, with volumes ▼ 6% ► Profiles ▼ 1%, with volumes ▼
Slide 11: H1 Adjusted Operating Profit
H1 Adjusted Operating Profit Profits Down as Expected 18 17.1 (4.3) 16 14 (4.2) 12 10 (3.5) £m 8 2.5 7.6 6 (1.6) 1.6 4 2 0 H1 2022 Volume Margin Recycling Labour Variable labour Restructuring H1 2023 (price) inflation costs savings ► Adjusted operating profit ▼ £9.5m vs H1 2022 ► Recycling feedstock
Slide 12: Capex
Capex Total Capital Expenditure (£m) Well-invested Facilities ► H1 2023 capex £3.8m (H1 2022: £6.4m) - Primarily maintenance capex • £1.6m in extrusion, including new tooling • £0.7m across the branch network to improve staff welfare facilities ► 2023 capex guidance c.£9m - Primarily maintenance cap
Slide 13: Working Capital
Working Capital Key Working Capital Metrics(1) Efficient Stock Management Stock Days Debtor Days June 2022 101 36 December 2022 93 30 ► Inflow from working capital £4.2m June 2023 86 34 - Includes the impact of stock reduction programme ► Stock days at 86 vs 93 at December 2022 and 101 at June 2022
Slide 14: Financial Summary
Financial Summary Including Technical Guidance for 2023 ► Sales volume down 6% against a backdrop of challenging Guidance (post-IFRS 16) 2022 2023 markets and strong comparative period Reported Guidance ► Adjusted profit before tax down 62% as expected, reflecting: Underlying income statement - Lowe
Slide 15: Summary and Outlook
Summary and Outlook EUROCELL PLC Darren Waters – Chief Executive Officer 2023 Half Year Results ► Weak current market backdrop - H1 profits down as expected - Action taken on cost and focus on efficient cash flow management ► Challenging outlook for H2 - Anticipate some easing of input costs - Furth
Slide 16: Appendices
Appendices eurocell. All together better
Slide 17: Divisional Review
Divisional Review Profiles Division P&L H1 H1 £m Change H1 2023 Performance 2022 2023 3rd party revenue 80.1 79.5 ▼ 1% ► Profiles Inter-segmental revenue(1) 37.9 34.9 ▼ 8% - Sales down 1%, with volume down 5% • Reduced RMI and weaker new build activity Total revenue 118.0 114.4 ▼ 3% • Partially offs
Slide 18: Cash Flow
Cash Flow Net Debt Reconciliation Dec Jun Strong Balance Sheet and Liquidity £m 2022 2023 Change Cash & overdraft 5.1 2.1 (3.0) Deferred consideration 0.8 - (0.8) 30 Borrowings (20.3) (17.3) 3.0 £m Net debt (pre-IFRS 16) (14.4) (15.2) (0.8) 25 4.2 (2.5) IFRS 16 leases (63.7) (60.6) 3.1 (1) (0.5) 20.
Slide 19: Powerful Sustainability Credentials
Powerful Sustainability Credentials Leading UK-based Recycler of PVC Windows Use of Recycled PVC in Manufacturing ► Improving % of recycled material consumed 35% 32% - Use in primary extrusion increased to 32% of consumption in H1 2023 (H1 2022: 28%) 30% 29% 27% 25% - Objective to increase to 33% of
Slide 20: Recycling Inputs and Outputs
Recycling Inputs and Outputs Cost and Carbon Savings K tonnes 2021 2022 H1 2023 ► Leading UK-based recycler of PVC windows - Substantial investments since 2018 Inputs – waste recycled - Keeping pace with sales growth and increasing % Post-consumer 40.5 37.9 21.9 recycled material used in primary ext
Slide 21: Environmental and Social
Environmental and Social Targets and KPIs KPI 2020 Base 2021 Result 2022 Result Target Link to UN SDGs Environmental – circular economy Recycled material used in production % used 25% 27% 29% 1% increase per year CO2 saved by recycling operation Tonnes saved 36kt 48kt 47kt Year-on-year increase Wast
Slide 22: Looking to a Sustainable Future
Looking to a Sustainable Future Four Themes to Our Sustainable Development Leading UN Sustainable Development Goals for Eurocell ► Carbon, energy and water - Defining pathway to potential carbon neutrality and net zero • Continuing to reduce Scope 1 and 2 emissions, particularly in PVC extrusion and
Slide 23: Product Range
Product Range Standard products Ranges of window profile and doors Fascias, soffits and guttering Traded goods Made-to-order products Skypod pitched skylights Conservatories and Equinox tiled roofs Syncro patio and Aspect bi-fold doors 22
Slide 24: Profiles Division
Profiles Division ► Manufactures: - Extruded rigid and foam PVC profiles using virgin PVC compound - Rigid products also include recycled compound ► Recycles: - Factory offcuts (post-industrial) and old windows (post-consumer waste) ► Sells: - Rigid PVC profiles to a network of c.400 third party fab
Slide 25: Building Plastics Division
Building Plastics Division ► Sells: - Range of Eurocell manufactured and branded PVC foam roofline and window fitting / maintenance products - Third party manufactured ancillary products: sealants, tools and rainwater products - Vista doors - Windows fabricated by third parties using products manufa
Slide 26: Route to Market
Route to Market Third Party Suppliers Recycling: Eurocell Recycle Third Party Suppliers 38,000 tonnes of virgin e.g. compound consumed (1), 16,700 tonnes of recycled • Rainwater products plus 3,300 tonnes of compound consumed • Sealants other raw materials (2) (29% of profile raw material • Tools co
Slide 27: Group History
Group History Branch expansion Branch expansion Eurocell Building Branch expansion reaches 100 reaches 150 Plastics launched reaches 50 Operational Branch Branch 1st Eurocell expansion expansion Building Plastics reaches 200 reaches 219 Extrusion branch business Rebranding: Primary Primary Primary P
Slide 28: Disclaimer
DISCLAIMER This Presentation may contain forward-looking uncertainties because they relate to events and In no circumstances will the Company be statements that involve substantial risks and depend on circumstances that may or may not responsible for any costs, losses or expenses uncertainties, and
Slide 29: Eurocell
eurocell All together better