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Safestyle UK chairman quits as replacement windows maker issues another profit warning

Declining consumer confidence and aggressive new market entrant, Safeglaze UK, continue to rock the boat at the retailer and manufacturer of PVCu replacement windows and doors
Lounge with sliding doors
A sliding doors moment?

Shares in double glazing group Safestyle UK PLC (LON:SFE) plunged after another profit warning and the abrupt departure of its chairman.

The company, which issued a couple of profit warnings last year and another one last month, said that revenues and profit before tax for 2018 are expected to be significantly below current market expectations with profits for the year expected to be heavily weighted to the second half.

As a precaution, the board has decided to cancel the final dividend of 7.5p in respect of 2017.

The group is feeling the effects of competition from a new market entrant that has recently ratcheted up the pressure, putting pressure on Safestyle’s market share and causing the order book to fill up less quickly than anticipated.

The board is undertaking a detailed strategic review of its operations and has a number of measures in hand aimed at addressing the competitive situation and improving performance.

As of today, that board will no longer feature Steve Halbert, who has been replaced by non-executive director Peter Richardson.

Richardson was a group board director and chief operating officer at Dyson Ltd for almost 15 years.

"I am now looking forward to working with the board and the executive team during what is a challenging period for the group as it undertakes a number of actions to emerge as a stronger, fitter, more agile business," said Richardson, after paying tribute to his predecessor’s contribution to the group.

According to the windows industry news source, The Glazine, the company that has put the wind up Safestyle UK is the similarly named SafeGlaze UK.

It offers a price match guarantee and says it is confident it can beat any genuine like-for-like quotation.

According to its web site, its headquarters are in Bradford, which is where Safestyle is based, so the company really has its tanks parked on Safestyle’s lawn.

Broker Liberum slashed its target price for Safestyle to 50p from 90p, saying that, at the 50p level, the shares should be underpinned by cash flow plus balance sheet that is still robust, with £11m of net cash expected to be maintained across 2018.

"Safestyle has warned that trading conditions have deteriorated further, mainly because of the intensifying actions of a very aggressive new entrant. It is now disrupting Safestyle's business across a wider geographical range and in more business functions (like installation). This has led us to cut our 2018E PBT estimate from £12m to £4m, with the impact of a revenue shortfall exacerbated by higher costs," Liberum said.

Shares in Safestyle were down 21.4% at 62.9p in late-morning trading and have lost around four-fifths of their value over the last year.

--- adds broker comment and updates share price ---

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