Eurocell Plc reported a resilient first half on Thursday, lifting adjusted operating profit despite softer underlying demand and confirming that full-year results will fall below previous expectations amid subdued trading conditions.
Revenue rose 10% to £193.2m in the six months ended 30 June, supported by the March acquisition of Alunet, while organic volumes were 2% lower year on year.
Adjusted operating profit increased 9% to £10.1m, though adjusted profit before tax edged down 3% to £7.8m on higher finance costs following the deal.
On a reported basis, operating profit fell 31% to £6.1m and profit before tax halved to £3.8m, reflecting £4m of non-underlying costs tied to strategic IT projects, restructuring and Alunet acquisition expenses.
Basic earnings per share declined to 2.9p from 5.3p.
The group generated £18.4m of net cash from operating activities, compared with £21.9m a year earlier, and increased capital investment to £6.6m from £4.5m.
The Alunet acquisition contributed £17.7m of sales and £1.6m of adjusted operating profit in the period, with management citing market share gains and early benefits from group synergies, including new business wins with existing Eurocell fabricators and the launch of the Aluna+ aluminium window system.
Group net debt excluding leases rose to £29m from £4.3m, with total net debt at £98.7m versus £60.9m a year earlier.
Divisional trends were mixed - Profiles division sales were up 1% with volumes down 2%, as weaker repair, maintenance and improvement activity offset modest improvement in new-build housing.
Branch Network sales fell 1% with volumes down 2%, though strategic initiatives continued to gain traction: window and door sales increased 8% and e-commerce sales grew to £2.9m from £2.1m.
New branch openings and relocations created a short-term operating loss of £0.7m but are expected to support longer-term growth.
Eurocell said it remained focused on cost reduction and operational improvements, with previously announced branch restructuring and other measures expected to deliver at least £4m of annualised savings.
The group is progressing a systems upgrade, including a new trade counter platform and ERP, with total implementation costs of about £10m across 2024 to 2026.
It raised its interim dividend 5% to 2.3p per share, with a £5m share buyback launched in March underway.
As of 1 September, 2.2m shares had been purchased for £3.3m, part of £7.3m of shareholder returns announced year to date.
"Our first half financial performance was resilient, in the context of trading conditions that remain subdued," said chief executive Darren Waters.
"We delivered an increase of 9% in adjusted operating profit despite lower organic volumes, thanks to a strong contribution from Alunet and effective cost control.
Our cash generation was solid and our financial position remains strong."
He added that "the acquisition of Alunet in March is a compelling strategic fit for Eurocell and the business has performed very well," while cautioning that "the full year outlook is below our previous expectations."
Looking ahead, the company said medium- and long-term prospects for the UK construction market remained attractive, and that it was "well positioned to drive sustainable growth in shareholder value" as cost actions, operational initiatives and the Alunet integration progress.
At 0934 BST, shares in Eurocell were down 5.19% at 128p.
Reporting by Josh White for Sharecast.com.