Superglass is preparing for a £6.5 million overhaul of its plant, dubbed Project Phoenix, after a financial restructuring last year that left Clydesdale Bank with convertible shares equivalent to 23% of the company.
But while revenues were up 14.5% year-on-year in the six months to £17.2m, Superglass warned there is still uncertainty about the Government's key green policy and said revenues for the rest of the year will be lower than previously expected.
With fuel costs soaring, the underlying pre-tax loss at the company widened to £776,000, against £2000 a year ago.
The uncertainty surrounding the insulation industry prompted house broker N+1 Brewin to cut its rating on Superglass from "buy" to "hold".
Its shares plunged 3p to 14.75p, valuing the company at £7.4m. Chief executive Alex McLeod said the refinancing had "fixed the balance sheet" of Superglass and played down the significance of the share price fall.
"The market is what the market is. For us it is business as usual in delivering the turnaround plan," he said.
Superglass said its performance is expected to improve in the second half of the year "albeit lower than was expected towards the end of 2011". Chairman John Colley, who succeeded Tim Ross on March 31, said: "The market generally is reasonably flat."
He said that while sales to housebuilders have barely changed, the commercial property sector is "well down" and home insulation sales through the Government's Carbon Emissions Reduction Target (CERT), have been volatile.
"We have been more robust on pricing during the first half of this year and we have made a price increase stick in the market and that is after four or five years of almost constant deflations of prices."
Mr Colley said this has meant the company losing some lower margin business.
Business through the CERT scheme, where energy companies subsidise insulation of customers' homes, typically accounts for 40% of Superglass's sales.
But this will be revamped when the Government introduces its new "Green Deal" this year. Superglass complained it is still unclear how the insulation market will be affected and is concerned that sales volumes could plunge. Meanwhile, Superglass has been hit by fuel price rises. Mark Fleetwood, analyst at N+1 Brewin, cut his price target for the stock from 38p to 20p, and reduced his stance to "hold", due to"near term uncertainties".
Ken Rumph, analyst at Numis, said: "The news today and from the wider market is not currently encouraging."
Superglass, which employs 190 people, has started hiring contractors for work to upgrade and expand its plant. But it has put on hold plans to install a £500,000 slabpacker following a review.