Safestyle on track for return to the black

Safestyle said Phase Two of its turnaround plan will restore the group to profitability
Safestyle said Phase Two of its turnaround plan will restore the group to profitability
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Double glazing firm Safestyle UK said it expects to return to profitability in 2019 after it saw off the challenge posed by SafeGlaze, an aggressive rival which has since closed down.

Bradford-based Safestyle said Phase Two of its turnaround plan will restore the group to profitability after it made a pre-tax loss of £16m in 2018.

Mike Gallacher, the group’s CEO, said: “We stabilised the business last year. This year is all about getting the business back to profit.

“A large number of agents have come back to us in very significant numbers. Hundreds of staff came back.”

The firm was hit by legal costs as it battled SafeGlaze and increased labour expenses for contract workers.

Safestyle reported an underlying pre-tax loss of £8.7m for the year to December 31, slightly higher than expected. Revenue fell 27 per cent to £116m and gross margin fell 10 per cent.

The retailer, which sells PVC windows and doors to the home improvement market, sees a better 2019 following a year of legal wrangling and fierce competition from rival SafeGlaze.

The group’s finance director Rob Neale said the group is now seeing good sales momentum.

Mr Gallacher added that Safestyle is vital to the local area.

“We understand how important we are as an employer in the area. We have more than 1,000 people in Sheffield, Barnsley and Bradford and we have 300 in Bradford city centre,” he said. This is out of a total workforce of 2,000.

Last March, Safestyle sued SafeGlaze, which had been eating into Safestyle’s market share. The companies settled and Safestyle signed a five year agreement with the co-founder of SafeGlaze.

In December, it forecast a bigger loss for the year as it ramped up spending to hire contract workers.

Analyst Charlie Campbell at Liberum said: “Safestyle’s new management has successfully stabilised the business and seen off the challenge posed by an aggressive new entrant in 2018.

“With most of the lost agents and staff now back at Safestyle, sales order intake stepped up at the end of 2018 and this has continued in the first quarter of 2019.

“Phase Two of the turnaround plan will restore the group to profitability and provide a stable platform from which to restore revenue and profit growth from 2020. With the strong new management team now demonstrating success we remain convinced that profits can be significantly improved over this year and next. We see around 50 per cent upside to our 105p target price.”