Diversification is the key as Superglass aims for a rebound

INSULATION maker Superglass yesterday hailed the success of its diversification programme as it reduces its reliance on a UK government-backed energy efficiency scheme for homes.

The Stirling-based firm grew direct sales to housebuilders by 15.6 per cent during the second quarter and increased its share of the builders' merchant market from 17 per cent to 25 per cent in the past year.

Chief executive Alex McLeod told The Scotsman he was pleased with the progress being made to reduce the firm's dependence on the carbon emissions reduction scheme (Cert), which requires power companies to help their customer reduce their energy usage.

Cert accounted for 60 per cent of Superglass's sales in 2009 but has now fallen to 36 per cent.

Slow take up of Cert was blamed for an 11 per cent fall in turnover during the six months to 28 February to 15m. The firm broke even - compared with a 2.6m interim profit last year - but slumped to a 2.2m pre-tax loss following amortisation relating to a management buyout in 2005, before the firm floated.

Chief financial officer Tony Kirkbright said there would be one final 2.2m amortisation during the second half, after which he said the bottom line would reflect the cash generation of the business.

Superglass issued a profits warning last month, highlighting the slow up-take of Cert, so the interim results matched the revised City expectations.

In November, the firm renegotiated its loan repayments, with McLeod saying the bank had remained supportive during Superglass's production problems over the past year, when both of its furnaces were shut down at different times for repairs.

The winter snow wiped 500,000 off Superglass's profits, with rising energy prices partially offset through efficiency savings from the repaired furnaces.

McLeod said he was confident of meeting City forecasts for the full year.