Bosses at insulation manufacturer Superglass insisted the company is “exceptionally well-placed” for growth, despite booking multi-million-pound losses and warning of more cost cuts to come.
The Stirling-based firm more than two years into a turnaround plan dubbed ‘Project Phoenix’ saw sales collapse in the year to August, as Government-backed energy-saving schemes failed to attract householders.
Volumes fell 22.5%, with turnover tumbling 25% to £24.4m. Pre-tax losses reached £7m following exceptional charges, marking a total reversal of the previous period’s £6.8m profit.
But the group has high hopes for the coming years as it begins to realise cost savings including fresh efficiencies in logistics and inventory operations expected to amount to £5m per annum, and hopes to take advantage of a recovering housing market.
Superglass has also pledged to revise its strategy in favour of innovation and new product lines, and will also benefit from a refinancing deal agreed with the Clydesdale in June.
Under the agreement, the company will enjoy a 4-year repayment holiday on residual bank debt of £2.5m. That figure was reduced by £8.7m following a fresh equity raise earlier this year, with the lender paid £3m in cash and a further £5.7m being converted into share rights.
Superglass, one of Stirling’s major private employers with around 170 staff, had been forced to take urgent action to stave off the threat of administration.
The deal marked the company’s second refinancing agreement in just over 18 months, and came hot on the heels of capital spending of around £7m on new plant machinery.
Executive chairman John Colley hailed the investment in “best-in-class” technology, completed in April, as one example of “good progress on a number of fronts”. He foresees “significant ongoing savings” for the business, to complement the improved capital structure.
But he was cautious over short-term prospects under the Green Deal and Energy Company Obligation schemes designed to encourage householders to insulate and promote reduced energy use.
Superglass said the initiatives had coincided with a 90% reduction in demand for loft and cavity wall insulation.
“Levels of activity in Green Deal and ECO continue to disappoint, and consequently revenues in this area in the current financial year will be lower than originally anticipated by management,” said Mr Colley.
“Our strategy for the current financial year is to open up further market opportunities for Superglass.
“Our focus will be to continue to reposition the business through product and service innovation, delivering enhanced product quality and outstanding customer service.
“Superglass is now positioned to take advantage of any recovery in its end markets and therefore deliver shareholder value.”
Losses included a £5m exceptional charge for goodwill impairment, recognising uncertainty over Government retrofit programmes and their likely impact on future cash flows.