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Superglass blow as shares fall on profits warning

SUPERGLASS Holdings has seen its shares plunge 22% following a profit warning, which highlighted very challenging conditions in the UK market.

SOLUTIONS: Chief executive Alex McLeod and the board expect the firm to return to profitability. Picture: Peter Devlin
SOLUTIONS: Chief executive Alex McLeod and the board expect the firm to return to profitability. Picture: Peter Devlin

The Stirling-based insulation maker said it had suffered a shortfall in UK sales in the first half and "the overall trading performance of the business for the period, and for the full year to 31 August 2014 will be significantly below management expectations".

The warning came in a trading statement, in which Superglass again pinned much of the blame for the trading challenges it faced on the perceived shortcomings in the Government's efforts to encourage people to "retrofit" insulation in existing properties to help cut carbon emmissions.

Superglass said uptake of the Green Deal scheme introduced in January 2013 remained very low. The company said the resulting problems had been compounded by the Government's decision to announce in the Autumn Statement that it was extending the Energy Company Obligation scheme, only to then put the changes out to consultation.

"What we have got is a hiatus in activity, which I suspect will take some time to conclude," said chief executive Alex McLeod.

In November Superglass had complained of a collapse in activity as the official CERT scheme was replaced by the ECO/Green Deal schemes.

In response Superglass has redoubled efforts to find new outlets for the output from its Stirling plant, where around 150 people are employed.

"To combat the weakness in UK demand, the company has begun actively developing routes to eastern European markets which, while less profitable than UK sales due to high transport costs, generate a positive contribution," said Superglass.

However, asked whether Superglass would not be better moving production closer to markets in Europe Mr McLeod said any such change would be a complex and costly process.

He estimated it would cost £60 million to build a plant like the one Superglass has from scratch.

Mr McLeod said he had no doubt that Superglass could have a successful future in Stirling.

The board still expects to return to profitability, before interest, tax, depreciation and amortisation, by the end of the second half of the year.

Superglass expects to be able to deliver cost savings worth £5m annually by the autumn.

It said: "The company continues to trade with adequate cash headroom going forward, and is expected to be generating cash on a monthly basis by the year end, although the cash balance at 31 August 2014 will be below original expectations."

Shares in Superglass Holdings closed down 12p at 43p on the Aim market.

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