Heywood Williams apperars to have turned the corner according to bullish statements from the management on the publication of its interim results.
Highlights:
- Turnover reduced mainly due to disposals to £194.2m (2003: £278.3m)
- Operating profit increased to £3.7 million (2003: £0.6 million loss)
- Pre-tax profit up to £3.1m (2003: £1.7m loss)
- Pre-tax profit after exceptionals and goodwill amortisation £2.7m (2003: £3.4m loss)
Results from continuing operations:
- Turnover from continuing operations £156.7m (2003: £152.6m)
- Operating profit from continuing operations £2.4m (2003: £1.5m)
Recent developments:
- Significant elements of the restructuring programme now complete
- Robert Barr, new Chief Executive, joined the group
- Bristolpipe sold for £15.4 million in the second half, removing volatile business with limited strategic fit
- Balance sheet strengthened, debt-free after Bristolpipe disposal
- Head office functions rationalised
- Operationally focused management team – returning Plastic Systems to profit is the no.1 priority
Robert Barr, Chief Executive of Heywood Williams Group PLC, said: ‘The first half of 2004 saw the successful implementation of a substantial programme of change designed to streamline and strengthen the group. Heywood Williams is now focused on its market leading businesses of specialist distribution of building products in the US and UK and the extrusion of plastic profiles in the UK. The group is now profitable on an ongoing basis and we continue to work towards delivering full year expectations. We are determined to realise the potential from our market leading positions as the group moves forward.
‘The UK PVC window, door and conservatory market was weaker than expected in the first six months of 2004 and this continues to date. There are no firm industry statistics on the whole sector, but the industry view is a market decline of at least 5%. Against this background, the sales of our Hardware businesses were broadly flat, as were operating profits. Plastic Systems sales declined by 12.4% largely due to the effect of customers lost during the period of supply chain disruption in 2003. All efforts are being directed to generating new business to arrest and reverse this trend. Despite the lower sales and higher PVC resin costs (£0.8 million), the operating loss of Plastic Systems was restricted to £2.3 million, a little better than the first half of 2003. This was achieved primarily through lower customer credits, better raw material efficiency, lower distribution costs, and reduced headcount. Customer service levels have improved, but much more work remains to be done. The focus on increasing sales volumes is absolute, but inevitably time will be required to generate the additional sales necessary, at acceptable net margins, to return the division to profitability.
‘In the UK specialist distribution sector, we are the market leader in hardware distribution to the PVC windows, doors and conservatory market with a share of approximately 26%. Product development will now receive extra impetus, as will the full extension of product sourcing options and distribution into the already established Eastern European markets. We will also evaluate the options available for the development of our regional sealed unit operation.
‘In UK Plastic Systems, despite the loss of volume in recent years, we remain the largest producer, with an estimated market share of 11%. Clearly, the drive to reverse the sales decline will be the central focus of the group for the second half of 2004 and all of 2005. In addressing this, it is important to recognise that the customer base for cellular profiles is primarily specialist stockists, whereas our rigid profile customers are mostly fabricators of windows, doors and conservatories. Our future sales initiatives will be designed in a bespoke manner, for these different customer groups. Nevertheless, the realisation of the potential performance will take time to achieve, and eliminating losses is the first target.
Source
Glass Age
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