Safestyle shares fall 16% as it warns of tougher year

Shares of Bradford-based window and door company Safestyle UK plc fell about 16% after it warned that it expects 2023 revenue to be below current expectations “as a result of the challenging market conditions and continued strategic investment.”

Safestyle said its 2022 revenue grew 7.7% to £154.3 million but it made a loss before taxation of £8.5 million.

The firm returned to dividend payments for 2022, with an interim dividend paid of 0.4p per share and a final dividend proposed of 0.1p per share.

In its outlook, Safestyle UK said the trading context of the UK economy and consumer confidence “remains challenging.”

The firm added: “Within this context, order intake for the year to date has been variable. January was in line with management’s expectations but, February and March to date have been slower than anticipated …

“Our order book has increased since the start of the year, but remains at the same levels as at the end of January …

“We have continued to invest in our brand through a TV and radio campaign across February and March which is designed to amplify our value proposition and emphasise the relevance of our product at a time of high household energy costs …

“We are very focused on continuing to increase our market share and the Board plans to continue with the strategic investment agenda described at our Capital Markets Day, albeit prudently, to ensure that the year still represents a return to profitability …

“Therefore, as a result of the challenging market conditions and continued strategic investment, the board does now expect revenue to be below current expectations and full year underlying profitability to be at least £2.0m, as a balance is struck between driving sales and the levels of investment made into the business. The medium-term strategic objectives remain unchanged …

“Notwithstanding the above, we remain confident that as the national value player operating in a historically-proven resilient sector, we are well-placed to attract consumers in these tougher economic times, increase market share and also make progress towards our medium-term financial and strategic objectives.”

Safestyle UK CEO Rob Neale said: “2022 was a challenging year for our business. We were forced to deal with a number unforeseeable issues which impacted our financial results and slowed the momentum we had built up through 2021.  

“The most pleasing aspect of 2022 was the resilience our business showed to meet these challenges head on and simultaneously embark upon a significant strategic investment agenda which will set the foundations in place for our business to grow over the medium term.

During the first quarter of this financial year, we have seen variable trading patterns which reflect the difficult consumer environment across the wider economy.  

“Whilst mindful of these conditions, the board remains focused on increasing our market share by continuing to invest behind our strategic agenda.  

“However, it is important to note that much of this investment is variable and the board will use the levers available to it should market conditions dictate more prudence.  

“Consequently, we now expect full year underlying profit to be at least £2.0m.

Notwithstanding this, we remain excited about the future of Safestyle and believe that appropriate investments made now will set us up well for growth when consumer confidence returns.”