Eurocell Reports Resilient H1 2025 with Alunet Boost Despite Challenging Outlook

Eurocell H1 2025: resilient top line, Alunet delivering, outlook trimmed

Eurocell has posted a solid first half in tough markets, helped by the newly acquired Alunet and tight cost control. The company manufactures and distributes PVC and aluminium door and window products to the trade, with exposure to both repair, maintenance and improvement (RMI) and new build housing.

The message: operationally resilient, cash generative and still investing for growth – but the full year outlook is now below previous expectations as trading remains subdued.

Headline numbers investors should know

Metric	H1 2025	H1 2024	Change
Revenue	£193.2 million	£175.7 million	+10%
Adjusted operating profit	£10.1 million	£9.3 million	+9%
Adjusted profit before tax	£7.8 million	£8.0 million	-3%
Adjusted basic EPS	6.0p	5.6p	+7%
Reported operating profit	£6.1 million	£8.9 million	-31%
Reported profit before tax	£3.8 million	£7.6 million	-50%
Basic EPS	2.9p	5.3p	-45%
Gross margin	51.0%	52.5%	-150 bps
Net cash from operating activities	£18.4 million	£21.9 million	-16%
Net debt (pre‑IFRS 16)	£29.0 million	£4.3 million	+£24.7m
Net debt (reported)	£98.7 million	£60.9 million	+£37.8m
Interim dividend	2.3p	2.2p	+5%
Capital investment	£6.6 million	£4.5 million	+47%

Note: adjusted figures exclude non‑underlying items of £4.0 million (strategic IT costs £2.2 million, restructuring £1.4 million, Alunet acquisition costs £0.4 million).

What drove the performance

Alunet acquisition doing the heavy lifting

• Post‑acquisition sales of £17.7 million and adjusted operating profit of £1.6 million from March to June, representing 36% sales growth versus the corresponding 2024 period.
• Early synergies: 10 Eurocell fabricators added to Alunet Systems and the new Aluna+ aluminium window launched alongside Eurocell’s Iconiq roof lantern.
• Comp Door continues to win installers, with the new Sleekskin door well received.

Why it matters: aluminium is a growing slice of UK fenestration. Bringing systems in‑house broadens Eurocell’s offering and protects share as tastes shift from PVC into aluminium.

Core divisions mixed, reflecting the market

• Profiles third‑party revenue up 1% to £73.3 million, with volume down 2% as RMI stayed weak, partly offset by modest improvement in new build. Adjusted operating profit slipped 2% to £8.3 million.
• Branch Network third‑party revenue down 1% to £102.2 million, volumes down 2%. Adjusted operating profit fell to £0.9 million (‑59%), hit by price competition, wage inflation and investment in growth programmes.
• Within branches, strategic initiatives are helping: window and door sales up 8%, e‑commerce up 41%, and new branches contributed £0.9 million of sales.

Margins, costs and cash: the moving parts

Gross margin of 51.0% was 150 basis points lower year‑on‑year, though excluding Alunet it was 52.6%. Input costs were stable in H1 (PVC resin, feedstock, electricity), but competitive pricing in branches and labour inflation – including April’s changes to employers’ National Insurance and the National Living Wage – squeezed profitability.

Non‑underlying costs increased to £4.0 million, mainly the ERP and trade counter system programme and restructuring. Cash generation remained healthy at £18.4 million, albeit below the prior period which benefited from a working capital inflow.

Balance sheet, dividend and buybacks

Net debt rose to fund the £29 million Alunet deal and new leases for branches and vehicles. Pre‑IFRS 16 net debt is £29.0 million, while reported net debt including leases is £98.7 million. The group operates a £75 million revolving credit facility to May 2027 and reports comfortable covenant headroom. Management expects pro forma net debt to be below 1.0x pre‑IFRS 16 EBITDA at 31 December 2025.

Shareholder returns continue: an interim dividend of 2.3p per share (£2.3 million) and a buyback of up to £5 million launched in March 2025 (2.2 million shares purchased at £3.3 million as of 1 September). Year‑to‑date returns announced total £7.3 million.

Strategy progress worth noting

• Branch rollout: 7 new sites and 5 relocations in H1 (216 sites now), creating a short‑term operating loss of £0.7 million but designed to drive future growth. Target estate of at least 250 sites over three to four years.
• Windows and doors initiative: now live in all 216 branches, delivering incremental sales – up £0.9 million versus H1 2024 and £2.0 million versus H1 2023.
• Digital: e‑commerce sales up to £2.9 million (H1 2024: £2.1 million) and 7,302 new spending accounts opened.
• Cost actions: branch restructuring and other overhead reductions expected to deliver at least £4 million annualised savings, with more efficiencies targeted for 2026.
• ERP replacement: Intact iQ for trade counters and IFS Cloud group‑wide, total programme c.£10 million over 2024‑26, on track for transition around mid‑2026.
• ESG: 30% recycled content in production (H1 2024: 32%), SBTi‑verified targets and a published Transition Plan towards Net Zero by 2045.

Outlook and my take

Guidance is softer: Eurocell says the full year outlook is below previous expectations as RMI demand remains sluggish and macro uncertainty persists. There are “modest early signs” of improvement in new build, but from a low base. Management is leaning harder into cost reduction and operational improvements to protect margins.

Overall, I see H1 as creditable: adjusted operating profit up 9% in a down market shows Alunet was the right move and that cost control is working. The trade‑off is higher finance costs and leverage in the short term, plus a profit drag from new branches and systems investment. If housing activity stabilises into H2 and Alunet momentum continues, Eurocell should be well placed to benefit.

Key watch‑outs for H2 2025

• Market demand: organic volumes were 2% lower and branch pricing is competitive. Any further softness would pressure margins.
• Labour and overhead inflation: wages and on‑costs remain a headwind.
• Debt and interest: finance costs rose to £2.3 million, including c.£0.6 million from the Alunet deal. Cash discipline needs to stay sharp.
• Execution risk: ERP rollout and branch expansion must land cleanly to unlock planned efficiencies.
• Safety: LTIFR increased to 6.4 in H1 2025 (2024: 4.1 full year) – management is refocusing on higher risk sites.
• Recycling performance: recycled content dipped to 30% due to mix and downtime; preventative maintenance is being stepped up.

Bottom line for investors

Eurocell is balancing cyclical weakness with self‑help and a strategically smart pivot into aluminium via Alunet. You are getting a growing ordinary dividend, ongoing buybacks and clear cost actions, but against a backdrop of subdued demand and higher financing costs. For me, the swing factors into year‑end are Alunet’s H2 trajectory, branch drag narrowing, and any firming in new build. If those go the right way, today’s resilience can convert into better operating leverage when the market turns.