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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:

  • Moderation from post-pandemic highs
  • Adverse impact of higher inflation, real wage falls and higher interest rates on disposable income
  • Demand for larger RMI project work has remained robust
  • Pension draw down and desire for a maintenance-free property
  • Change in family circumstances

Eurocell drivers:

  • Strong competitive position in Profiles coupled with potential competitor difficulties
  • Increased run rate on new fabricator account acquisitions and healthy pipeline of other potential new fabricator customers
  • Enhanced proposition in Building Plastics:
    • Maturing branches with improved format
    • New website/enhanced digital experience
    • Redesigned conservatory/roof products
    • Range extensions including outdoor living products
    • Value-added services including installer scheme
  • Sales of windows, conservatories, outdoor living products and other big ticket made to order products through branches

New build (c.10% Eurocell revenue)plus

Market drivers:

  • Housebuilders’ strong pipeline of plot builds but uncertainty regarding starts/completions targets
  • Homeowner demand although suppressed by increased mortgage rates
  • Help to Buy remains, but restricted to first time buyers
  • Ongoing long-term shortage of housing may attract government intervention, but affordability remains an issue
  • Right to Buy in public sector

Eurocell drivers:

  • Benefit of differentiated specifications and dedicated salesforce to pull-through demand
  • New build competitor difficulties may present a significant opportunity to grow share
  • Opportunity to leverage ESG credentials
  • Building regulations (Future Homes Standard) beneficial to Eurocell skillset
  • Strong relationships with large and medium sized housebuilders and new build fabricators
  • Large and professional Eurocell fabricators consolidating supply
  • Growth of Eurocell cavity closer driving contact with housebuilders
  • Vista increasing market share in doors

Commercial (c.5% Eurocell revenue)plus

Market drivers:

  • Increased focus on fire safety and basic repairs/maintenance of existing public housing stock
  • Record-high student numbers, and a full return to campus, may support investment in education accommodation schemes

Eurocell drivers:

  • Only brand maintaining a sizable salesforce displacing aluminium with PVC
  • Better U-values and 30% cheaper
  • More fabricators working in commercial

Market conditions at present are generally supportive and we have good potential to outperform, capitalising on our strong market positions and clear strategy.

EXTERNAL MARKET DATA

GDPplus

UK GDP is projected to continue to fall throughout 2023, and 2024 H1, as materially tighter financial conditions weigh on spending.

Interest ratesplus

UK interest rates are currently at 4.0%, and are expected to potentially rise further in 2023, to address inflationary pressures in the UK economy.

Private housing RMIplus

Having reached historic high levels of growth as the UK emerged from the COVID-19 pandemic (21% growth in 2021 and flat in 2022), output in the private housing RMI market is expected to decline by 9% in 2023, before marginal growth of 1% in 2024.

Housing marketplus

Following two years of growth (15% in 2021 and 3% in 2022), activity housing is forecast to reduce by 11% in 2023, and by a further 1% in 2024.

Constructionplus

Construction output is forecast to fall by 5% in 2023, although from a historic high after two years of growth (13% in 2021 and 4% in 2022) that raised activity to levels higher than pre-pandemic, before growth of 1% in 2024.

Sources: Bank of England forecasts for the UK economy (published November 2022), Construction Industry Forecasts 2022-24 (published January 2023).

Eurocell Revenue by Market (%)

Private home improvement and, increasingly, new build housing are currently the most important market segments for Eurocell.

CPA Construction Industry Forecasts (2022-24)

 

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