UK’s Genuit (GEN) falls as it warns of a decline in H2 profit
By Jenni Reid
10:41, 16 November 2021
British manufacturer Genuit Group (GEN) saw its share price slide further Tuesday morning as it said in a trading update that its operating margin would be lower in the second half of the year.
GEN was down 5.81% to 603.20p at 10:30 GMT on the London Stock Exchange, continuing its downward trend since the start of September.
This follows a sharp rise after strong first-half results were published in August. The FTSE 250 firm’s stock has gone up 5.78% in the year to date.
The Leeds-based group, formerly called Polypipe, includes businesses producing heating systems, plastic piping, road maintenance equipment, renewable energy solutions and construction products.
Trading update
Genuit said in the four months to 31 October it had seen revenue of £207.6m ($278.9m), 31.1% higher than in 2019, and that it “remained highly cash generative”.
Previously-published first-half revenue was up a similar 32% in 2019, with operating profit up 3.1% to £36.3m.
Those results saw it reinstate its 4p per share dividend, which was suspended in 2020 due to the pandemic.
According to the firm, the operating profit would be lower in the second half, and it expects full-year 2021 earnings before interest and taxes to be in the range of £92.5m- £95.9m, in line with analysts polled by the company. Results will be published on 15 March 2022.
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Challenging environment
Genuit is facing the headwind of cost inflation, which it was countered with pricing actions that would not support its margins until early 2022. It also said on Tuesday that it continued to face supply chain issues, particularly in its Climate and Ventilation division, which it was “working hard to mitigate”.
“The group traded robustly in the four months to the end of October with continued strong demand from our UK Residential new build, RMI (repair, maintenance and improvement) and Infrastructure markets,” said chief executive officer Martin Payne.
“The medium-term fundamentals of our markets remain strong with sustainability at the heart of everything we do. We are alert to the ongoing macro related market risks such as continuing supply-chain shortages and cost inflation, but with a clear strategy built around strong environmental growth drivers and backed up with legislation, the group is well-positioned for the future.”
The company announced its chief operating officer and board member Glen Sabin’s resignation earlier this month.
Read more: Genuit issues 4p dividend following H1 results
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