Epwin avoids this week’s UK construction shares dip

Manufacturer of building products Epwin Group PLC (LON: EPWIN) began trading positively this morning, avoiding the slump suffered elsewhere in the UK construction sector and continuing its rally as the week progresses.

Though hardly groundbreaking performance, the Company can celebrate being the successful odd-one-out this week, especially after a mixed couple of years and seeing its share price fold in half in 2017.

Today’s rally can at least in part be attributed to the Company’s largely positive financial results for the first half of 2019. While the Company’s H1 revenues contracted modestly by £0.5 million (to £140.0 million) on a year-on-year comparison for the first half, their profit indices all indicated positive movement. The Group’s underlying operating profit rose from £7.5 million to £9.4 million, alongside their adjusted operating profit before tax moving from £6.8 million to £7.3 million and their underlying operating profit margin increasing from 5.3% to 6.7%.

Epwin shareholders saw similar progress, with their adjusted EPS at 4.20p and their basic EPS at 3.78p, up from 3.78p and 3.29p respectively. Similarly, the Company’s dividend per share increased from 1.70p to 1.75p on-year.

The Group added that it had made further progress in its site consolidation and rationalisation (particularly at its Telford site), had continued investment to enhance its product portfolio and was trading in line with expectations.

Epwin comments

Jon Bednall, Chief Executive Officer, said,

“The Group delivered a robust trading performance in the first half of 2019, in line with expectations in what continues to be challenging market conditions.”

“We have made good strategic progress on all fronts – the acquisition of PVS provides further routes to market and supports the investment we made to develop our decking system; the new aluminium window system was launched on time and has been well received by our customer base and the wider market.”

“Operationally, our site consolidation programme has continued to plan, including important steps forward on our new warehousing and finishing facility in Telford, where the transactions will significantly reduce the Group’s debt. We also successfully exited from our Northampton glass-sealed unit manufacturing operations.”

“Current trading is line with expectations, and the Board retains its positive view of the medium-term prospects for the market given the continued under investment in RMI, long-term new build demand and pent up demand in social housing markets.”

Investor notes

The Company’s shares rallied 3.44% or 2.60p on Wednesday morning, up to 78.20p per share 11/09/19 08:05 BST. The Group has a p/e ratio of 10.00 and their dividend yield is generous at 6.48%.

Elsewhere in construction and development news, there have been updates from; Ashtead Group plc (LON: AHT), SIG plc (LON: SHI), Alumasc Group plc (LON: ALU), Somero Enterprises Inc (LON: SOM), Barratt Developments Plc (LON: BDEV), Wincanton plc (LON: WIN) and Travis Perkins Plc (LON: TPK).

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Senior Journalist at the UK Investor Magazine. Also a contributing writer at the Investment Observer, UK Property Journal and UK Startup Magazine. Postgraduate of King's College London with a specialisation in Business Ethics. Interested in Development Economics and David Hume.