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Superglass shares fall after gloomy update

SUPERGLASS Holdings has issued another gloomy update on trading – which was followed by a sharp fall in its share price.

INSULATED: Alex McLeod will oversee Superglass's transition to a manufacturer of 'lower-cost, higher-quality' glass fibre products. Picture: Peter Devlin
INSULATED: Alex McLeod will oversee Superglass's transition to a manufacturer of 'lower-cost, higher-quality' glass fibre products. Picture: Peter Devlin

The Stirling-based firm highlighted continued uncertainty about how the transition to a new government programme to encourage investment in energy efficiency will impact on the business.

It has been grappling with tough conditions in construction markets for years.

"We remain cautious about the Green Deal channel," said Superglass.

In an update on trading since September 1, Superglass complained about an apparent lack of clarity on the transition from the old CERT scheme to the Green Deal, due to come in to full effect on January 28.

The company, lead by chief executive Alex McLeod, added: "Volumes in this channel are likely to reduce with a potentially slow start-up of the successor Green Deal scheme."

Any such delay would be unwelcome as sales under the CERT scheme provided some compensation for tough times in core construction markets.

Superglass told investors: "Market conditions in the UK are extremely challenging and remain difficult to predict."

The company said sales volumes have been steady since the annual results announcement in November.

However, it added: "A stronger than anticipated demand for volume commodity products has had a negative impact on our average sales price and overall market conditions are also impacting prices."

Input cost pressures persisted, with energy costs continuing to rise during the period. However, directors said the board is making good progress towards shifting Superglass into a "lower-cost, higher-quality producer of glass fibre insulation solutions".

They expect the company will use broader routes to market to offer a wider product range to an enlarged customer base.

The company is on track to complete the first phase of a planned upgrade of its facilities, called Project Phoenix, on budget in the first half of 2013.

The upgrade will allow the company, which employs around 170 people in Stirling, to compress its output. This should help it to reduce packaging and transport costs. Superglass hopes to generate annualised cost savings of £5 million. The first full year of savings is expected in 2013/2014.

Directors said the company's net debt position continues to be better than management expectations.

The balance sheet of the company has been transformed after Clydedsale Bank completed a £12.15m debt for equity swap in December 2011. Shares in the company closed down 6%, 0.38p, at 5.75p. They traded at 22.75p in January last year.

Superglass cautioned about the impact of the switch to the Green Deal on several occasions last year.

In November the company reported flat revenue of £32.4m for the year to August 31. Operating losses narrowed to £2.5m from £4.3m.

All resolutions at yesterday's general meeting passed with the support of at least 99% of proxy votes cast.

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