Epwin Group (EPWN) , a manufacturer of energy efficient and low-maintenance building products, issued a half-year trading update for the 6 months to June 30, 2024 (H1 2024).
Epwin said operating profit for the half-year was in line with a strong prior year comparative and board expectations. Operating margins were ahead of the prior half-year.
As expected, revenues were behind last year as a result of lower PVC input prices reducing previously levied surcharges, and demand remaining subdued in new build and RMI markets. Underlying turnover was 8% lower than H1 2023, but only 2% behind H2 2023.
Epwin retained a strong balance sheet with low net debt as of June 30, 2024 of £19.5m, equivalent to 0.6x adjusted EBITDA after paying a final dividend of £4.0m and purchasing £3.3m of shares under its share buy-back programme during H1. EPWN's market cap was £128.5m as of time of writing.
Jon Bednall, CEO, commenting: "Trading in the first half was consistent with the Board's expectations with underlying profit in line with a strong 2023 comparative, in what continue to be challenging markets.
We remain confident of achieving our full year expectations, with a further year of profit progression, and have a positive view of our future prospects despite the short-term macroeconomic headwinds. Looking further ahead, the medium and long-term drivers for the Group's products remain positive."
View from Vox
Epwin reports strong trading in H1 2024 in line with management expectations as it continued to balance volume and margin amid challenging RMI markets. While revenues dropped 2% half-on-half, underlying profit was in line with a strong FY23 comparative, and the group expressed confidence in delivering full-year profit growth in line with market consensus. Margins also improved year-on-year.
The balance sheet remained strong in H1 with £55m left in the group's facilities to support strategic objectives and acquisitions. Epwin maintained its ongoing dividend policy, bolstered by a share buyback programme, the initial stage of which completed in April 2024. Since then, buybacks have been extended by a further 3m shares, 2.7m of which have already been repurchased and canceled at a cost of £2.4m. The extended programme is set to run until September 2024.
In the short-term, the group's diverse customer base, longstanding supplier relationships, and strong balance sheet should continue to support trading in the challenging macro environment. In the medium to long-term, EPWN's markets look positive as the UK continues to face a shortage of new and affordable housing, with the Government committing to grow, modernise, and make more energy efficient the existing housing stock.
EPWN shares gained 5.20% on the announcement.
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