Polypipe Group Plc (LON:PLP) told investors it has seen an improving trend as it begins to recover from the coronavirus (COVID-19) crisis, with June’s revenue down 30% year-on-year versus the 66% drop recorded back in April.
“We are encouraged by the group's performance in May and June compared to April and also by reports of better than expected activity in the housing market after its reopening on 13 May 2020, as well as Government-announced increased levels of investment in infrastructure projects,” the company said in a statement.
“However, at this stage we remain cautious as to whether this performance will be sustained into the autumn and winter.”
READ: Polypipe in £120mln equity raise
Polypipe noted that it is manufacturing at all its main sites though all are at varying levels of capacity utilisation.
Some 25% of the company’s workforce is furloughed, down from 61% at the height of the crisis.
It is now entering a consultation period with employees as the company looks reduced costs and cut around 250 jobs, about 8% of the workforce.
The company noted that medium-term economic and industry forecasts show a significant negative impact on the UK economy and specifically the construction industry.
Residential new build demand is predicted to fall 20% in 2021, compared to 2019, according to forecasts from the Construction Products Association, while home ‘remodelling’ is forecast to drop 15% and commercial demand is anticipated to be around 18% lower.
Polypipe added that it is not planning to close any facility which will mean its positioned to react should it see any sustained rise in customer demand.
Net debt stood at £184mln at the end of March, and the company brought in £120mln via an equity funding in May. The company noted that its liquidity position includes £350mln of revolving credit facilities, which it added will allow for investment in key strategic growth projects.
“Whilst there is inevitable uncertainty in the near term, the board remains confident it is taking the necessary actions to continue to deliver long-term sustainable returns in markets that remain fundamentally attractive,” the company said.
“With this current level of uncertainty, we are not yet reinstating financial guidance, and this remains under review by the Board for the time being.”
The company’s delayed interim results statement is scheduled for September 15.
In London, Polypipe shares were down 0.45% to 447p in Tuesday's early deals.