BATHROOM and kitchen surface manufacturer Rearo has announced that it expects to return to its pre-Covid performance level next year, despite seeing costs doubling, after targeting several new commercial sectors.
The Glasgow-based producer of laminate wall panels and worktops revealed it is on course to achieve a turnover of £10.5 million by June 2024, up from £8.5 million in the past year.
This year’s income is up by £500,000 compared with the same period in 2022, but still almost £1 million below target, largely caused by increased supply costs, impacted by the war in Ukraine. Prior to the war, Rearo sourced birch plywood for its Selkie range, primarily through Russia.
The company supplies a range of UK businesses, including fast food restaurants, supermarkets, and high street chains.
It remains on course for a full recovery following the pandemic, during which Rearo supplied key projects such as the NHS Louisa Jordan Hospital in Glasgow. However, many other large private and public projects were put on hold and sites shut down.
Loss of commercial revenues was partly offset by an uptake in domestic sales, due to an increase in home DIY renovations.
MD Graham Mercer said the business is on a path to growth after targeting new commercial sectors including hospitality, healthcare, and education. Rearo is also targeting further opportunities for increased sales through add-on product lines such as wash troughs, and the introduction of new laminate finishes, including anti-fingerprint technology and soft matte surfaces.
The company added that it has reduced costs by entering into fixed contracts for energy supplies, and by using cheaper and more environmentally friendly exterior grade MDF, rather than birch plywood for its products.
Mercer said, “Despite having a slow start to the year, with costs of some raw materials estimated to have doubled, we are more optimistic than at this time last year. Sales have improved in Q3 and Q4 and we expect, overall, to finish the year down on budget by around 10.4%.
“In 2023-2024, we are forecasting a return to pre-pandemic sales figures, which peaked at 10.5milion.”
According to Mercer, supplies of Rearo’s main raw material – birch plywood – was cut off completely last year by the embargo and sanctions on goods purchased from Russia.
He explained, “We continue to source some birch plywood from Finland, but we have switched the bulk of our material to exterior grade MDF, sourced from sustainably managed forests in Ireland.”
Plywood is the traditional choice for wall panels, made from multiple layers of natural thin veneer that are glued together. In contrast, MDF is engineered by breaking down softwood residuals into wood fibres, which are then combined with wax and resin to create a smooth surface.
Mercer commented, “Despite issues with supply, quality and sustainability, plywood is still specified on many commercial projects. By moving away from this option, we have lost out on some projects. However, we are committed to changing course, leading the way by providing a more sustainable and ultimately, better-quality product for our customers and for the planet.
“Covid, Brexit and now the war in Ukraine have taught us that there are risks in maintaining long supply chain routes which can become disrupted, causing significant operational problems for the company. In addition to that, and more importantly, we are pursuing an environmentally sustainable path for the future of the company.”