Despite a challenging economic climate, a major Northumberland manufacturer has declared itself 'well placed' to sustain its performance, even after reporting a fall in both turnover and profit.
Financial Results Show Resilience Amid Challenges
The Hexham-based site of the international Egger Group, which employs over 800 people making wood panels for kitchens, bedrooms, and offices, has published its accounts for the year ending April 2025. The figures reveal a 4.1% drop in turnover to £412.2 million and a significant decrease in operating profit, which fell from £41.8 million to £28.2 million.
Directors attributed the results to two years of difficult trading conditions, marked by rising inflation and increased operational costs that have impacted sales and profitability across the sector. Notably, the company increased its workforce from 817 to 844 employees, raising its payroll bill to £46.8 million. Furthermore, no dividend was paid to its Austrian parent company, Egger Holzwerkstoffe GmbH, compared to an £80 million payout the previous year.
Strategic Positioning for Long-Term Growth
In the company's strategic report, director Jonathan Tully stated that Egger UK had nonetheless 'delivered strong financial results for the year'. He emphasised the firm's robust foundations, citing its diverse customer base, ongoing investment in employees and production technology, and commitment to high service levels.
"Despite the current uncertain economic outlook, Egger UK is well placed to sustain its financial performance... in the long term," Mr Tully said. The report outlines the company's focus on a profitable international growth strategy, where market leadership and sound profitability enable further investment.
Managing Supply Chain and Raw Material Pressures
A key challenge highlighted is the pressure on its primary raw material: wood. Increased demand from the biomass sector is affecting both pricing and availability. To mitigate this supply chain risk, Egger UK is pursuing long-term contracts with key suppliers and utilising a backward integration strategy through its subsidiaries, Egger Forestry Limited and Timberpak Limited.
These measures are designed to secure a sustainable supply chain, allowing the company to continue delivering high-quality products. The directors confirmed they have prepared financial forecasts until September 2026 and are confident the company has adequate resources to continue operating successfully, even under a plausible downside scenario.
