Investors put further pressure on Anglian Group's shares yesterday as the UK's largest double- glazing company announced a 16 per cent drop in annual profits to pounds 21.1m, and warned that the short-term trading outlook was bleak.
The shares, which have under-performed the stock market by 40 per cent since the company floated three years ago, dipped 4p to 160p on the news.
Anglian's attractiveness was further reduced by the board's decision to conserve cash by maintaining the dividend total at 10.3p per share.
The company has fallen victim to lower consumer expenditure on replacement windows, the backbone of its business. Manufacturing costs have also risen sharply, mainly due to the jump in prices for polymers, the prime chemicals used to make uPVC window frames.
The squeeze on profit margins has been hard. While profits fell during the year, sales values rose by more than 9 per cent to pounds 193.3m. Turnover in Anglian's core retail windows business edged up 2 per cent to pounds 146.9m.
"We're very cautious about the short-term outlook," said Ron Swift, chief executive. David Herman, finance director, added: "I don't think we've come out of it [recession] in many respects."
Market conditions remain tough. Consumers no longer borrow to the hilt to install double glazing, and bargain-hunting is putting pressure on prices. The value of the average order per household remains static at pounds 2,250, and the number of orders since January is slightly down on last year.
Anglian has been unable to compensate for rising raw material costs. Mr Swift said the company had only been able to achieve half of a budgeted 4 per cent increase in retail prices, and more discounts may be needed.
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