Epwin, a supplier of building products, has cautioned that weak demand is expected to persist throughout 2024.
The company reported a 12% decrease in revenue for the first half of the year, reflecting ongoing challenges in the market.
Epwin, listed on the AIM market, revealed a revenue of £158 million for the first half of 2024. This marks a 12% decline from the £180 million reported during the same period in the previous year.
Despite the revenue drop, Epwin’s pretax profit saw a marginal rise, reaching £8 million, up from £7.9 million recorded a year earlier. The underlying operating margin improved by one percentage point to 7.6%.
The UK building products sector has faced significant headwinds, primarily due to a reduction in housebuilding activities in recent years. Elevated borrowing costs have dampened demand for new homes, impacting companies like Epwin.
Epwin forecasts that demand will ‘remain subdued’ for the remainder of 2024. The company highlighted that ‘most housebuilders are expecting the number of completions to fall again in 2024.’
Epwin emphasised its resilience, attributing it to a broad product range, a diverse customer base, well-invested operations, a flexible cost base, long-term supplier relationships, and a robust balance sheet.
The company remains optimistic about a potential market recovery in 2025, supported by expected improvements in home affordability resulting from falling interest and mortgage rates.
In early trading on Wednesday, Epwin’s shares fell by 6.1%, reflecting investor concerns over the predicted weak demand.
Despite these challenges, CEO Jon Bednall maintained a positive outlook, stating that the first-half trading was consistent with board expectations, with underlying profit matching a strong comparative from 2023.
Analysts forecast an operating profit for Epwin in the range of £25.6 million to £26.1 million for the entirety of 2024, aligning with market expectations.
Epwin announced a 5% increase in its interim dividend, now at 2.1 pence per share, demonstrating the firm’s commitment to returning value to shareholders.
Epwin is expanding its stock buyback programme, committing to repurchase an additional 5 million shares starting on Wednesday.
The company highlighted that its strong cash generation and balance sheet have made it possible to take advantage of market conditions, repurchasing shares at attractive levels and returning additional funds to shareholders.
CEO Jon Bednall expressed optimism for the future, suggesting that a market recovery is more likely in 2025. He highlighted the positive medium and long-term drivers for the group’s products and the company’s strong balance sheet that will facilitate continued investment in growth, both organically and through selective acquisitions.
Epwin’s performance in the first half of 2024 has been shaped by a challenging market, reflecting a broader trend in the UK building products sector.
Despite a decline in revenue, the company has maintained profitability and remains strategically positioned to weather the ongoing market challenges, with a cautiously optimistic outlook for 2025.
