Shares of Bradford-based window and door company Safestyle UK fell about 13% on Tuesday after it published a trading update saying it expects that the group’s underlying profit before taxation for FY22 will be materially below current market expectations.
Safestyle said its order intake from late September to the end of October was “volatile.”
The firm attributed this to “the well-reported political and economic news and events that have had a direct, adverse impact on consumer confidence.”
It said consequently, order value in this period was 7.6% behind expectations and 2.7% lower than the prior year.
In addition, Safestyle said it experienced higher costs of acquisition than forecast.
The firm said that demand has improved since early November with order value returning to expected levels and growing by over 30% year on year across these last three weeks.
“The lower order intake of September/October will result in lower installation volume levels (c.5k frames) than expected this year,” said Safestyle.
“The improved order intake in November has driven an increase in cost in the month, but came too late to deliver the associated revenue this year.
“Unfortunately, both aspects will significantly impact FY22 profitability.
“The improved order intake later in the year will, however, result in an order book that will close the year significantly ahead of our original expectations which will help mitigate any sales volatility in early FY23.”
In its outlook, Safestyle said: “These reduced sales and thus lower installation volumes combined with higher costs of order acquisition incurred until early November, costs of maintaining capacity levels in the short-term and investment in a larger closing order book will adversely impact the group’s gross margin.
“As a result, the board expects that the group’s underlying profit before taxation for FY22 will be materially below current market expectations.
“The board also forecasts that net cash, whilst still remaining healthy, will be lower than expectations at c.£9m at the year-end.
“Looking ahead into 2023, there remains limited visibility on the strength of demand for next year, but the board expects that the market will continue to be sensitive to negative sentiment …”