Shares of Doncaster-based plastic piping and ventilation systems firm Polypipe Group fell about 7% on Tuesday after it issued a trading update on the impact of the Covid-19 pandemic on the firm and the group’s response to date.
Polypipe said its revenue for the six months to June 2020 was 24% lower than the six months to June 2019.
Further, Polypipe said lower demand for its products and services could lead to the loss of 250 jobs — about 8% of its workforce.
“The group has seen an improving trend since our update on 7 May, with June 2020 revenue some 30% below 2019 levels compared to 66% below in April 2020,” said Polypipe.
“Our Commercial and Infrastructure Systems segment has remained relatively resilient throughout this period, with many contractors managing to return to operations (albeit at reduced productivity levels) and the group servicing specific, crisis-related emergency project work for NHS hospitals and care/recovery applications, particularly in our Nuaire ventilation business.
“Recovery in the Residential Systems segment has been somewhat more subdued, reflecting the shutdown of the new house build market for much of April and May, followed by a more measured return to work.
“Overall, group revenue for the six months to June 2020 was approximately 24% lower than the six months to June 2019.
“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.
“However, at this stage we remain cautious as to whether this performance will be sustained into the autumn and winter.
“We are currently manufacturing at all main sites at varying levels of capacity utilisation, and currently have 25% of our workforce furloughed, compared to 61% at the height of the crisis …
“Latest forecasts from the Construction Products Association show that residential new build demand in 2021 is likely to be 20% lower than 2019 levels, Housing RMI 15% lower than 2019 levels, and commercial demand 18% lower than 2019 levels, even with recovery in the second half of 2021.
“In light of this medium-term outlook, we are taking regrettable but necessary steps to adjust our manning levels and cost base to reflect this level of demand.
“Unfortunately, it means that we are entering a consultation period with our employees to review these steps, which if actioned in full, will lead to the loss of approximately 250 jobs or 8% of the workforce …
“The group reported net debt of £184 million on 31 March 2020 and subsequently completed an equity raise of £120 million in May 2020.
“The group’s liquidity includes a £350 million revolving credit facility, enabling the group to continue to invest in its key strategic growth projects.”