Epwin expects demand for building products to ‘remain subdued’ in 2024

Building products supplier Epwin has posted a slide in revenue for the first half of 2024 and said demand would likely “remain subdued” through the rest of the year.

The AIM-listed firm reported £158m in revenue for the six months, down 12 per cent from £180m during the same period in 2023.

Epwin’s pretax profit came in at £8m, from £7.9m a year before, while its underlying operating margin widened by one percentage point to 7.6 per cent.

The firm’s shares dropped 6.1 per cent in early trading on Wednesday.

Building suppliers have been challenged by reduced UK housebuilding activity over the last couple of years as higher borrowing costs hit demand for new homes.

Epwin said it expected demand to “remain subdued” for the remainder of 2024 and noted that “most housebuilders are expecting the number of completions to fall again in 2024”.

“However, the group’s broad product range, diverse customer base, well-invested operations, flexible cost base, longstanding supplier relationships and strong balance sheet provide a large measure of resilience,” Epwin said.

Falling interest and mortgage rates are expected to improve affordability of homes for potential buyers and provide a boost to the housing market.

“Trading in the first half was consistent with the board’s expectations, with underlying profit in line with a strong 2023 comparative, despite challenging markets,” Jon Bednall, Epwin’s chief executive, said on Wednesday.

“We retain a positive view of our future prospects and believe a market recovery is now more likely during 2025. Looking further ahead, the medium and long‐term drivers for the group’s products continue to be positive, whilst our strong balance sheet will enable us to continue to invest for growth both organically and by selective acquisitions.”

The firm said it remained confident in delivering an underlying operating profit for 2024 in line with market expectations. A company-compiled analyst consensus has estimated a range of £25.6m to £26.1m for the metric.

Epwin declared an interim dividend of 2.1p per share, up five per cent on the same period last year.

It also announced an extension of its stock buyback programme to repurchase a further 5m shares from Wednesday.

Epwin said the move reflected “the fact that our strong cash generation and balance sheet provide the opportunity to take advantage of market conditions to repurchase shares at attractive levels and return additional funds to shareholders”.