Safestyle UK sees lower profit on its rocky road to recovery

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(Reuters) - Safestyle UK Plc said on Thursday it expects annual profit below current market expectations, as the British windows and doors retailer battles to move past a year of legal wrangling and fierce competition from rival Safeglaze.

The Bradford-based retailer, which sells PVC windows and doors to the home improvement market, said margins had recovered slower than it had hoped and costs are still a burden.

The company said in March that it expects to return to profitability in 2019, after it posted a bigger 2018 pretax loss, hurt by legal costs from its battle with a rival and increased labour expenses for contract workers.

The company said it sees a small profit for 2019, but it does expect it to be below current market expectations.

Liberum analysts cut their 2019 pretax profit forecast to 700,000 pounds from 4.5 million pounds.

"Although this is disappointing, we note that this still represents a £9.1m profit swing in 2019 ... management's message is clearly that recovery is still on track across the forecast period," the analysts said.

Safestyle UK has a plan in place to stabilise its business and it said the second phase of the plan is "well underway".

The company also said it was rebuilding its order book and that it expects revenue to grow by about 10% compared to first the half of 2018, even with some elements of consumer demand appearing to be soft.

Last March, Safestyle sued Safeglaze, which has been eating into Safestyle's market share. The companies settled and Safestyle signed a five-year agreement with the co-founder of Safeglaze. Safestyle had said all areas of its operation were being hurt by Safeglaze's entry into the market.

(Reporting by Samantha Machado and Noor Zainab Hussain in Bengaluru; Editing by Bernard Orr)

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