The Alumasc Group – today’s positive Trading Update points to increased sales and profits, shares 351p, TP 410p

15.07.2025

This morning one of my old favourites The Alumasc Group (LON:ALU) guided the market with its latest Trading Update covering the year to end-June.

It showed a strong performance, with the results expected to be in line with expectations.

The £126m-capitalised group is a UK-based supplier of premium building products, systems and solutions, with almost 80% of its group sales being driven by building regulations and specifications (developers/housebuilders, architects and structural engineers) because of the performance characteristics offered.

The group today guided that, despite ongoing macroeconomic uncertainty in the majority of its commercial markets, its revenues and profits from its three main divisions are expected to be ahead of its prior year results.

Management Comment

CEO Paul Hooper stated that:

"I am pleased to report another year of revenue and profit growth and a performance in line with market expectations.

This strong performance was achieved against a backdrop of challenging market conditions, with macroeconomic uncertainty affecting business and consumer confidence.

We have established plans to mitigate any continued short term challenges, by continuing to focus on winning market share and entering adjacent markets, and by providing excellent customer service and new products. We will also maintain our disciplined approach to capital allocation and our commitment to efficiency improvements.

As market conditions improve, we remain optimistic that our growth strategy and focus on higher-growth environmentally sustainable solutions will deliver significant shareholder value."

The Business

With its headquarters based in Burton Latimer, near Kettering in Northamptonshire, it is a sustainable building products, systems and solutions company.

The company's segments include Water Management, Building Envelope and Housebuilding Products.

The Water Management segment manufactures sustainable rainwater goods, drainage products and gas and airtight inspection covers.

Under the Alumasc Water Management Solutions banner, customers benefit from rainwater and drainage products that capture, retain and control the flow of rainwater inside and outside buildings from origination source to water course, sewer or ground.

The Building Envelope segment supplies a range of roofing products and also provides technical advice, service and environmental credentials.

While the Housebuilding Products segment manufactures products for housebuilding made from recycled and recyclable materials.

The group’s brands include Alumasc, Alumasc Skyline, Alumasc Rainwater, Harmer, Wade, Gatic, Roof-Pro, Alumasc Roofing, Blackdown and Timloc.

In the year to end-June 2024 the group’s Water Management side accounted for £48.32m of total sales (47.98%), Building Envelope operations covered £37.60m sales (37.34%), while Housebuilding Products saw £14.81m turnover (14.71%).

On a geographic sales basis, some 90.6% were made into the UK market, 5.3% into the Far East, 3.0% into Europe, with the Middle East, North America and the Rest of the World accounting for the balance 1.1%.

Trading Update

The Update guided that it had continued execution of the group’s strategy despite challenging market conditions.

It is expected that for the year its revenue growth will be some 12% at around £113m (£101m), underpinned by organic growth significantly ahead of UK construction markets.

Its underlying profit before tax for the period is expected to be around £14.2m (£13.0m), 9% above the prior year, in line with market expectations.

The group reported that revenue and profits were ahead of the prior year across all three of its divisions.

The Building Envelope and Housebuilding Products divisions continued their strong momentum, supported by new product introductions and outstanding customer service.

While UK revenues within the Water Management division were impacted by project delays, however this was offset by export sales growth, including faster-than-expected call-offs from a significant project at Chek Lap Kok airport in Hong Kong.

It considers that it has a strong platform to deliver further significant shareholder value when market conditions improve.

The Equity

There are some 36,133,558 shares in issue.

The larger holders include John McCall (11.24%), Philip Gwyn (7.57%), Hargreaves Lansdown (7.08%), Charley Stanley (5.05%), AXA Investment Managers (4.98%), Graham Hooper (2.93%), JP Morgan Asset Management (2.53%), Maitland Asset Management (2.46%), Chelverton Asset Management (1.52%), Teviot Partners (1.11%), and Castlefield Investment Partners (1.10%).

Broker’s View

Analyst David Buxton, at Cavendish Capital Markets, sees upside scope for the group’s earnings from potential accretive bolt-on acquisitions that enable operational efficiencies.

His Target Price for the shares is a conservative 410p.

For the year to end-June 2025 his estimate is for group revenues of £113.0m (£100.7m) with adjusted pre-tax profits of £14.2m (£13.0m), lifting earnings up to 29.4p (26.6p) and a slightly improved dividend of 11.0p (10.8p) per share.

The 2026 year, now underway, could see £116.4m sales, £15.3m of profits, with 31.4p of earnings covering a dividend of 11.3p per share.

My View

This group has shown over five years of consistent growth.

We will have to wait until Tuesday 2^nd September to see just how the group fared in its Final Results.

The group’s shares, that this time last year were just 190p, were up to 395p just over a month ago – an excellent market-beating performance.

They fell to 351p in early dealings this morning in reaction to the Trading Update.

The question now is whether they will be ‘top-sliced’ by investors who have enjoyed the significant price advances of the last year or so.

(Profile 13.02.20 @ 116p set a Target Price of 145p*)

(Profile 08.06.20 @ 80p set a Target Price of 105p*)

(Profile 10.01.24 @ 183p set a Target Price of 222p*)

(Asterisks * denote that Target Prices have been achieved since Profile publication)