Epwin Group PLC (LON:EPW) shares fell on Wednesday as challenging market conditions and customer issues in 2017 saw the PVC windows, doors and fascia group report a sharp drop in 2017 profits and it announced a review of its dividend policy.
For the year ended 31 December 2017, the AIM-listed firm reported a 47.8% drop in headline pre-tax profit to £12mln, down from £23mln a year earlier, as its underlying operating profit margin fell by 120 basis points to 7.5%.
The group's full-year revenue rose by 1.7% to £298.3mln, up from £293.2mln a year before, driven by strong sales of new products and a full year effect of its 2016 acquisition of National Plastic.
However, underlying operating profit fell 12.9% to £22.3mln from £25.6mln due to the subdued market conditions, significant input cost inflation and challenges at two of its largest customers Entu PLC and SIG PLC (LON:SHI).
Conditions to remain challenging in 2018
The building products firm said trading in the current year ‘has largely been in line with expectations’, but it expects market conditions, particularly in the key Repair, Maintenance, and Improvement (RMI) sector to remain challenging in 2018.
Jon Bednall, the group's chief executive officer, said: "We remain confident in the long-term drivers in the RMI market and have a positive view of the Group’s prospects in the medium-term and ability to continue to offer our shareholders an attractive return.”
Epwin proposed a final dividend of 4.46p per ordinary share, making a total payout for 2017 of 6.69p, up 1.4% on the previous year.
However, the group said it has decided it is appropriate to review its dividend policy for future years and plans to offer "a progressive dividend that is approximately twice covered by adjusted after-tax profits."
In lunchtime trading, Epwin shares were down 1.9% to 78.0p.