The level of UK economic activity, in particular the state of the repair, maintenance and improvement (‘RMI’) and new-build housing markets, are important drivers of our performance.
EUROCELL MARKETS AND DRIVERS
Private RMI (c.85% Eurocell revenue)plus
Market drivers:
- Improve vs move: Property prices, housing supply and moving costs affect whether homeowners improve their homes rather than move. The UK’s ageing housing stock should also drive RMI demand
- Disposable income: Inflation, real wage growth and mortgage interest rates affect disposable income for repairs and maintenance
- Consumer confidence: Macroeconomic factors, including unemployment levels, influence consumers’ appetite for large discretionary spend
- Focus on the home: Although moderated from post-pandemic highs, the focus on improving living spaces, and developing home offices, drives demand for conservatories, garden rooms and simple extensions
- Ageing population: The desire for maintenance-free properties, coupled with tradesman availability, influences the demand for uPVC, rather than wood, products.
Our response:
- Optimise our branch network through a programme of estate transformation, including new branches and relocations, supported by enhanced site-selection methodology
- Develop our customer offering for the Branch Network, including increased sales of windows and doors
- Become the homeowner’s choice for extended living spaces through products such as garden rooms, extensions and roof lanterns, supported by our Select installer scheme
- Leverage our new website, plus increased investment in digital technology to drive incremental e-commerce sales, generate homeowner leads, attract new trade accounts and drive traffic to our branch network
- Protect our Profiles trade fabricator business and maintain our value-added service propositions that support our customers
- Customer-centric approach to new product development
- Build a reputation within the industry that creates loyal trade fabricator partner advocates.
New build (c.10% Eurocell revenue)plus
Market drivers:
- Housing supply: Structural deficit in new house building, compared to government targets
- Government incentives: Ongoing shortage of housing may attract government intervention or incentives, especially with a UK general election due in 2024
- Housebuilders’ plots: Housebuilders have a strong pipeline of plot builds but uncertainty exists regarding starts/completions/targets
- Homeowner demand: Although suppressed by increased mortgage rates, rising rental costs and the enduring desire to own your own home drive home ownership
- Buyer incentives: ‘Share ownership’ schemes, although subject to eligibility, and ‘Right to Buy’ schemes in the public sector, make home ownership more affordable and accessible.
Our response:
- Protect our Profiles new build fabricator business and maintain the value-added service propositions that support our customers
- Leverage our strong proposition with national housebuilders in the regional new build market
- Provide a fit-for-purpose solution to address the Future Homes Standard regulations
- Continue proactive engagement with our customer base regarding sustainable product development
- Provide a sector-leading technical support service
- Leverage our ESG credentials, including our market-leading recycling operations.
Market conditions at present are generally supportive and we have good potential to outperform, capitalising on our strong market positions and clear strategy.
UK economic forecasts
Eurocell Revenue by Market (%)
CPA Construction Industry Forecasts (2023-25)
GDP and interest rate trends are expected to be slightly positive over the next two years.
The level of UK economic activity, in particular the state of the repair, maintenance and improvement (‘RMI’) and new-build housing markets, are important drivers of our performance.
Source: CPA Construction Industry Forecasts (central scenario – published January 2024).
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