Alumasc trading in line despite challenging market

26th Oct 2023 12:27

(Sharecast News) - Building products supplier Alumasc said in a Thursday trading update that despite market challenges, it put in a strong and resilient performance in the first quarter, aligning with the board's projections.

The AIM-traded firm, holding its annual general meeting, said that while specific segments of the construction industry were continuing to experience subdued demand, particularly in new residential construction, it had countered that by observing an uptick in international sales.

That included a revival in deliveries to the Chek Lap Kok airport expansion project in Hong Kong.

Additionally, introducing new products in the housebuilding division over the last 18 months has bolstered business, helping to offset a general slowdown in recent housebuilding activity.

Alumasc said it focused on prudent investments to enhance revenue growth, elevate customer service, refine operational efficiency, and foster new product development.

At the same time, it managed costs carefully, particularly in areas where market conditions were less robust.

Notably, a restructuring of the commercial and sales teams within the water management division was underway, expected to yield annual savings of £0.8m, streamlining the management structure and elevating customer service and capability.

The company said it was still engaged in discussions with the Competition and Markets Authority (CMA) over its proposed acquisition of ARP Group, as announced on 23 July, with an expected conclusion in December.

Alumasc said its financial stability remained robust, buoyed by solid cash generation in the first three months of the new financial year due to its focus on working capital.

While aware of prevailing demand challenges, the board was confident in Alumasc's business model's resilience and capacity to implement effective cost-cutting measures when needed.

As a result, its expectations for the financial year ending 30 June 2024 remained unchanged.

"I am pleased with the group's performance, in challenging trading conditions," said chief executive officer Paul Hooper.

"Our excellent customer service and leading positions in a diverse range of end markets provide resilience, and we are continuing to progress our strategy, investing in areas where we see growth opportunities while controlling costs prudently where appropriate.

"With a strong balance sheet and a product portfolio which delivers environmental benefits to our customers, we remain well positioned to benefit from the eventual recovery in our end markets."

At 1113 BST, shares in Alumasc Group were up 0.81% at 144.66p.

Reporting by Josh White for Sharecast.com.