INSULATION maker Superglass has unveiled further cost savings as it battles to implement a turnaround plan amid tough trading conditions.
The Stirling company reported flat revenue of £32.4 million in the 12 months to August 31 this year but narrowed operating losses from £4.3m to £2.5m.
Overall sales volumes were up 2.9% mainly through growth of home insulation products to building contractors under the Carbon Emission Reduction Target (CERT) scheme although pricing remains under pressure.
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Poorer-than-predicted sales performance from CERT and the construction market plus a loss of market share in cavity wall insulation due to a change in sourcing policy from a customer, led to turnover being around £800,000 lower than predicted.
However, the balance sheet of the company has been transformed after a £12.15m debt for equity swap in December last year with lender Clydesdale Bank.
Net borrowings at the year-end were £3.5m, down from £17.6m, while the company reported net assets of £16.3m as opposed to a net liability figure of £1.1m in 2011.
Part of the turnaround involves Superglass overhauling its manufacturing plant – dubbed Project Phoenix – in a bid to lessen waste and reduce costs.
Scottish Enterprise has agreed to bring forward around £500,000 of funding of a £2m Regional Selective Assistance grant to help Superglass progress with the upgrade of its facilities, where it employs around 170 people.
Chief executive Alex McLeod said introducing new technology to reduce the size of products will provide an additional £1.4m of annual savings bringing the total from Project Phoenix to £5m.
He said: "It will allow us to compress our products so will reduce our packaging and transport costs significantly. That will also lessen our carbon output.
"We are very pleased with how the turnaround is going and the position we are in."
At a pre-tax level in the most recent financial year profits were at £6.8m, against a £5m loss, due to a £10.3m exceptional credit relating to the debt for equity swap.
Mr McLeod hopes the Project Phoenix improvements, which he estimates are about 75% complete, will allow the firm to send more of its products outside the UK and widen sales opportunities.
He said: "We have exported our cavity wall insulation into Scandinavia for many years but with the improvements in cost and quality we do see that it can open up other markets for us. We are looking at further moves in Scandinavia and in Germany as well."
The company does not believe there will be any great rebound in construction markets, which dipped by more than 6% in volume during the 2012 trading period, but is more hopeful on the private housebuilding sector.
It has seen increased demand from customers such as Barratt and Redrow and there are indications that may continue.
Mr McLeod said: "We have launched products specifically for that market which are beginning to gain traction. We are now on the radar of housebuilders which is good."
There is concern about the transition from CERT measures to the Green Deal, which is to offer householders incentives to improve the energy efficiency of their homes, which is due to happen in 2013.
Mr McLeod said the group would hope to see a long-term increase in activity once the implementation of the Green Deal is agreed.
CERT activity since the end of the financial year has risen as energy suppliers push to meet targets by the end of 2012.
Superglass shares ended the day down 0.22p at 4.88p.