Proactive Investors - Safestyle UK PLC (LON:SFES) warned that profits for the current year are set to come in well below analysts' forecasts, as the market for its PVCu doors and windows takes a severe hit from falling household incomes, which have been impacted by stubbornly high inflation and rising interest rates.
The profit warning sent the shares down 46.54% to 9.65p in late morning deals on Thursday.
In a trading update, Safestyle said it expects an underlying pre-tax loss of £6mln for the first half to 2 July 2023, with revenue predicted to fall 5.4% to £74mln, in line with previous forecasts.
The company highlighted industry data which showed an 8% decline in the market for installations in the first half, worsening to a 12% fall in the second quarter.
Safestyle said its order intake dropped by 6.4% in the first six months and its order book closed 22% down on last year, which was unusually strong.
With the tough trading climate worsening in the last five weeks into July, impacting order intake further, the company warned it now expects its full-year performance to be “materially below current market expectations”.
On a brighter note, Safestyle said a TV campaign in the first quarter helped raise awareness of its brand, boosting its market share by 30 basis points to 8.0% in the first half.
“The board also remains confident that the group will continue to deliver market share growth for the remainder of the year,” it said.
Net cash stood at £0.9mln as at 2 July and the net cash position at the end of the year is still expected to be positive.
Safestyle said it remains fully compliant with its borrowing facility arrangements and the full £7.5mln facility continues to be accessible.