Safestyle set to raise prices after sterling collapse

Safestyle is the leading UK retailer and manufacturer of PVCu windows and doors for the homeowner market

The Bradford-based firm said price increases implemented at the start of 2016 helped margins to improve over the year and offset consumer finance subsidy costs.

The firm said it traded well in 2016 and reported a 10 per cent rise in revenue in 2016 to £163.5m and pre-tax profit has shown good progress and is in line with the board's expectations.

Safestyle said the second half of 2016 showed "slower growth" than the first half due to more challenging comparatives.

The group, which is the leading UK retailer and manufacturer of PVCu windows and doors for the homeowner market, said its performance in 2016 has been "pleasing" and it estimates that it has gained market share.

Steve Birmingham, CEO of Safestyle UK, said: “I am pleased to report that trading during 2016 was consistently strong and that we have achieved another year of record turnover.

"2017 will see increases in our raw material costs primarily due to sterling weakness. However, we plan to offset such increases by improving the price we obtain for our products. "Despite the uncertain macroeconomic outlook, we remain cautiously optimistic and believe we are well positioned to continue growing the business”

The said the group's growth is reflected by the 3.2 per cent increase in frames manufactured during the year to 288,460.

The number of installations rose 4.7 per cent to 62,989.

Analyst Charlie Campbell at Liberum said: "Management has advised that it expects to see rising raw material costs in 2017.

"This is largely due to the impact of weaker sterling on the cost of imported hardware (sourced from Asia in US dollars) and also the cost of composite door slabs and to some extent polymer prices.

"Management is confident, though, that it will succeed in getting a 4 per cent price rise through that will recover these cost increases as well as general inflation. Its confidence stems from the success in delivering a good price increase in 2016 (4 per cent underlying) and because all of the UK replacement window players have to manage the same cost pressures."

Analyst Matthew McEachran at N+1 Singer said: "Against tough comparativess, and with slightly less efficient conversion rates, second half sales were shy of expectations.

"But this was more than offset by strong margin performance, driven by price rises and absence of mix dilution.

"Despite the uncertain macro outlook, the board remains cautiously optimistic about growth prospects. However, it is unclear if the market is growing or not and national competition is intensifying, so further upgrades aren’t guaranteed."

Safestyle said cash flow has continued to be strong and it ended the year with cash of £13.5m, down from £16.5m in 2015, having paid a special dividend during the year of £5.6m and incurred £4.6m of expenditure on its new factory extension, which it said is on time and on budget.

The company intends to announce its audited results for the year to December 31 on March 23.