Ultraframe confirmed its position as market leader and its increasing commitment to defending market share, but with disappointing interim financial results that indicate first half UK sales down 13% for 2004. 'This in large part reflects the structural change of the conservatory market in the past year including new entrants from the home improvement window market, together with a significant shift towards a younger, more price-conscious conservatory buyer', the company says.
'While new and smaller competitors have been able to enter the market and increase sales in the budget segment of the market, Ultraframe has designed and developed new products focused on this growing segment and is broadening its distribution channels. In particular, Uzone has been developed over the last two years and the first of this product family has been introduced to market, with new price points to trade.

'With less than 20% of suitable homes having a conservatory, Ultraframe is upbeat about defending and growing its market share and potential for future growth as market leader.

Rod Sellers, Chairman, commented further: 'In North America, despite recent results from our franchise network being slower than expected, the strong performance of our retail stores gives us confidence in the underlying market potential.

'Overall, it is expected that Group profit for 2004 will be at the lower end of expectations, while management initiatives and a renewed strategic vigour should slow the rate of decline during 2005.'

The first half results reflect the increasingly competitive environment in the UK and the delay in seeing the benefits of the transition to higher quality franchisees in North America. On a constant currency basis, turnover on continuing operations for the half year was down 9.6%, with reported turnover on continuing operations down by 13.0% to £54.9m (H1 2003: £63.0m). This reflects a 10% decline in the average exchange rate of the US dollar against sterling in the period under review, compared to the same period last year.

Operating profit on continuing operations before goodwill amortisation and exceptional items fell from £12.1m to £5.1m. Profit before tax, goodwill amortisation and exceptional items declined by 58.4% to £4.7m and reported pre-tax profit was down by 65.0% to £3.2m (2003: £9.1m).

UK Turnover decreased 13.5% to £36.1m; year-on-year sales were down 8% in the first quarter and down 20% in the second quarter.

UK Operating profit of £7.9m is 28.9% lower than last year, reflecting volume related operational gearing.

Source

Glass Age