Downturn hits Wavin plumbing revenue

Plastic pipe and plumbing people Wavin, owners of the Osma and Hepworth plumbing brands, saw half-year revenue and margins fall.
Revenue for the UK and Ireland was EUR175m for the six months to June 30 2008. This is 23% down on the same period in 2007. Margins also fell, this time by 46% from 16.3% to 11.4%.

The lower revenue was mostly down to the continuing difficulties in the housing markets in the UK and Ireland, though the weakness of sterling against the Euro also had an effect, reducing revenue by 8%. Destocking by distributors also brought about a 5% reduction.

The company has said that restructuring measures are in place and are likely to bring in some EUR 6 million of savings when completed.

Wavin’s management remains “increasingly cautious on (the) outlook for the rest of 2008”. They are expecting to see further deterioration of the construction markets in the UK and Ireland, with other western European markets likely to follow suit.

Focus for the time being will be on tight cost control and managing cash flow by reducing working capital and capital expenditure. Wavin believe that raw material prices, energy and transportation costs will significantly increase in the second half on the back of higher oil prices, although they expect eventually to be able to offset these with higher sale prices.