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Boost for Baxi as turnover grows

Heating giant Baxi said it was confident about the future despite difficult economic conditions as it released results for the first six months of the year showing a significant increase in turnover.

The unaudited results released by holding company Heating Finance Plc showed turnover had increased by more than nine per cent compared to the same period last year to £418 million.

At the same time profits before exceptional items, impairment charges and goodwill amortisation had grown by 51 per cent to £28.3million.

The report said UK performance had been “steady”, Germany had seen “good” growth as its economy recovered from a slump at the end of 2007 and business in France was “recovering” after a major restructuring.

But, in Spain and Portugal there was a 16.5 per cent fall in sales volumes due to a weakening market only offset by the effect of the stronger Euro. This led to a decrease in profits of £0.1mill to £3.6mill in this region. Italy is also facing “challenging” times according to the report although the Italian business is exploiting a stronger market in Central and Eastern Europe.

Group chief executive Martyn Coffey described the results as “encouraging”.

He said: “In the UK market there is a lot of negative publicity driven by construction and new build. We have always said that we are more driven by replacement rather than new build. The statistics for our market are showing growth of four per cent and against that growth we have taken market share and we are outperforming the market.

“If people are affected financially there is the potential for people to put off replacement of their boiler, but if they put off replacement they will eventually have to repair it and that is a potential revenue stream.”

Despite the growth in turnover and profits before exceptional items the group reported an overall operating loss for the six month period of £7.9mill due to the exceptional £28.3mill costs incurred by restructuring facilities and employment strategies in France and the UK.

Mr Coffey emphasised these costs had already been announced and were part of efforts to streamline the company while protecting investment in the company and meeting its debt and interest payments.

He said: “These costs have to be taken as exceptional and we see it as an investment going forward. The major restructuring costs have been identified and put out into the public domain.

“I believe these results demonstrate we have looked at our cost base and we have addressed that and improved profitability. I would like to think this gives people the reassurance that we have taken the action needed.”

Mr Coffey added that he believed the company was offering an improved product line and was now gearing up for the launch of a new micro-CHP boiler – Ecogen – in the autumn.

He said: “We certainly believe that the current situation with energy costs rising is only going to improve the market for all renewable technology.

“The biggest opportunity we believe is with micro-CHP where it is easier to explain to the consumer about a boiler which looks very much like a boiler looks today, runs more efficiently and generates electricity effectively for free.

“We believe we have a product which is leading the way for wall hung micro-CHP and the interest we are seeing is only helping that belief.”