Romag shares go down despite 93% rise in sales

Dec 11 2008 by Peter McCusker, The Journal

FOLLOWING a record year, one of the region’s fastest growing companies says it may make acquisitions for the first time.

Stock market-listed glassmaker Romag recorded impressive annual sales growth of 93% taking revenue to £33.6m with pre-tax profits also rising sharply from £2.8m to £3.7m.

While the County Durham company’s margin was squeezed from 34% to 22%, the company – which has provided the glass for major projects such as Terminal 5 at Heathrow and St Pancras Station, London – say it is in line with expectations.

Chief executive of the Consett company, Lyn Miles said: “We have had a very successful year. There are still lots of opportunities to grow the business and we will continue with our marketing in new sectors and new areas.”

Exports accounted for 80% of the company’s sales with the Middle East being one area of rapid growth for the year ending September 30, 2008.

The company’s exclusive arrangement with an organisation in Dubai will help drive further growth and the company is looking to the United States as the pound falls against the dollar.

As well as achieving record sales, this year has seen Romag put in foundations for further volume increases by doubling the number of production lines of its most popular product PowerGlaz – which converts the sun’s rays into electricity – and accounts for 70% of total sales.

The company has also bought 200,000 acres of land on the industrial estate where it is based in Leadgate – which amounts to half of the land on the estate – for possible future development.

Despite its record year, Romag’s shares have taken a battering over the last 12 months, falling from a high of 273 in the spring to 72.5 at the close of play yesterday.

Ms Miles added: “There is uncertainty in all stock markets and it would be foolish for anyone to take a bullish attitude in any market over the coming months.

“We intend to focus on the strengths of the business and make sure we are ready to take advantage of any opportunities that may arise, including possible acquisitions. A lot of opportunities can come available at times like this. We are not all doom and gloom the key to the success of our business is our flexibility and our wide product portfolio.”

Broker Brewin Dolphin said the squeeze on margin may be due to increased competition and concluded that “despite the share price falls in recent weeks, we see the current valuation coming under further pressure.”

Ms Miles added: “The doubling of capacity on our PowerGlaz range should ease the margin pressures going forward.”

Chairman John Kennair said: “2008 has been a highly successful year for Romag, driven largely by our PowerGlaz business which has continued to gather momentum and increased sales three-fold on last year.

“We made further good strides this year in increasing our international footprint. Sales outside the UK now account for slightly more than 80% of total sales.”