Ultraframe's luxury glass houses lose much of their sparkle

Ultraframe shares crashed 16pc yesterday after the conservatory specialist effectively issued a fourth profits warning this year alongside its annual results.

Chief executive David Moore said the company only expected "to slow the rate of decline" next year after posting a 57pc fall in profits for 2004 to £12m.Including exceptional write-offs, Ultraframe made a profit of just £3.62m before tax against £28m last time.

Ultraframe was late to identify a shift in demand from luxury conservatories to budget "lean-tos" last year, and has been struggling to regain its footing since. Mr Moore hopes the launch this year of three budget products will help. He has also repositioned the business as a lower margin operation to take on "cut price rivals".

"In the early stages we were slow to react," Mr Moore said. "But in the past nine months we have repositioned the business and put in a new management team." Despite the succession of profits warnings, Mr Moore has the support of chairman Rod Sellers.

Analysts described the results as very poor and the shares shed 13.75 to 70p. Stephen Rawlinson at Arbuthnot said: "The business should never have been floated in the first place and should be subject to a private equity deal. It has wasted shareholders money on expansion."

Trading has toughened in the UK as "baby boomers" increasingly decide to hold on to their money in the face of the growing pensions crisis and weak equity markets, Mr Moore said. The new growth demographic is the "thirtysomething" generation of young families looking to increase their living space.

The rate of decline in the UK escalated from 13.5pc in the first half to 23pc in the second and, in the first two months of the current year, worsened further to 29pc. In the US, an extra $10m of marketing and investment costs and disappointing sales at its 310 franchise outlets pushed the division £500,000 into the red. The US chief executive is taking early retirement next year.

"We expect profits to retard in 2005," Mr Moore said. "But we want to stabilise and slow the rate of decline."

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