Safestyle winning a bigger share of market

Safestyle was Yorkshire's most successful flotation

The Bradford-based group, which has seen its shares rise 76 per cent since floating on AIM last December, said profit growth in the first six months of 2014 is expected to show good progress, reflecting strong underlying trading and better margins.

Safestyle’s market share rose from 7.9 per cent to 8.2 per cent in the first half of 2014, according to industry data.

The overall market grew by just over four per cent over this time. Last year was the first year of growth since the market collapsed in 2007 amid the banking crisis.

The group, which is one of the top three double glazing companies in the UK, said it is comfortable with current market expectations for the full year.

Analyst Matthew McEachran, at N+1 Singer, said: “Double glazing may not sound terribly glamorous, but Safestyle is the number one replacement specialist and it has a compelling, cash generative, business model.

“Our analysis indicates it is well placed to outperform on a medium term basis as a result of three contemporaneous themes.

“Firstly, the number of installations aged 20 plus years grows significantly over the next five years after an initial installation boom in the 1990s. Secondly, having lengthened materially, replacement cycles now look set to shorten on improved consumer confidence. Thirdly, a shift to digital leads significantly improves profitability.”

Safestyle reported a record order book in its first quarter after achieving record profits in 2013. Underlying pre-tax profits rose 58 per cent to £15m in the year to December 31.

The group said it is set for further growth this year as it expands into the south and south east and it has started TV advertising in the southern regions.

The company said it is well placed as the general economy and the home improvement market recover.

Safestyle is one of three big double glazing players in the market. Alongside Everest and Anglian, the three firms account for around 20 per cent of the market.

The remaining 80 per cent is shared between 20 and 30 regional companies and hundreds of local traders.

“We’ve got a value proposition,“ said Safestyle’s chief executive Steve Birmingham.

“We call it the Aldi effect. People are pleasantly surprised that they can buy a good quality product for less than our rivals.

“We exceed people’s expectations. We have a very high quality product for a very good price.”

The group said it has seen strong growth in a difficult market, driven by the “outstanding quality” of its products and the dedication of its staff.

“As economic conditions continue to improve and as we increase our geographical presence into the South of England we feel confident in a bright and successful future as a PLC,” said Mr Birmingham.

Analysts at Zeus Capital said in a note: “Safestyle has had a strong start to 2014. Revenue has grown faster than the overall installation market (8.9 per cent versus 4.3 per cent) leading to an increase in Safestyle’s market share to 8.24 per cent.

“An increase in 2014 would be the tenth straight year that Safestyle has increased its market share. We expect the strong growth to be reflected in profit progression, magnified by operational gearing, when the interims are released in a few weeks’ time.”