Accsys Technologies, which makes the acetylated wood products Accoya and Tricoya used in windows, doors, cladding and decking, fell about eleven percent on Monday to around 63.8p after a trading update covering the five months to 31 August.
Group revenue fell six percent to €56.9 million. Sales volumes dropped eleven percent to 22,186 cubic metres. Including its 60 percent-owned joint venture, aggregated revenue also fell six percent to €67.5 million, even though joint venture volumes rose three percent to 6,767 cubic metres.
The cause named in the RNS is one word: destocking. Distributors running down inventory rather than ordering fresh stock, with North America hit hardest, against a backdrop of inflation, higher interest rates and the Middle East conflict.
Note what that means and what it does not.
It does not mean fewer windows and doors were made. It means the people who buy from Accsys and sell to manufacturers decided to work through what was already on their shelves before placing another order. End demand may have softened somewhat. The eleven percent volume drop is not a measure of end demand at all.
This is the bullwhip effect, and it is the single most punishing dynamic in any business that sells through an intermediary.
A cafe reduces its weekly bean order by ten percent because trade is a little slower. Its distributor, seeing orders soften across a hundred cafes and sitting on a warehouse it financed at higher rates, decides to hold three weeks of cover instead of six. The roaster at the top of that chain experiences a ten percent fall in end consumption as a fifty percent collapse in orders for two months, followed by a sharp rebound when the distributor’s shelves empty.
Nothing dramatic happened at the consumer end. The amplification happened entirely in the middle, and the firm furthest from the customer absorbed all of it.
Which is why the recovery language in the update is as informative as the decline. The sales trend improved across the five months as destocking decreased. September trading is stronger. First-half performance is expected to be better than the five-month comparison, though still slightly below last year. That is exactly the shape a destocking cycle makes on the way out.
The margin story is the one that should decide how this is read. Management still expects full-year underlying EBITDA excluding the joint venture to be broadly in line with market expectations on lower revenues, which is another way of saying margin improved. Adjusted EBITDA is guided at €21 million to €23 million against €21.2 million last year, with price increases and cost control named as the deliberate response. Panmure Liberum cut its pre-tax profit forecast including the joint venture to €2.4 million from €7.7 million while keeping a buy rating and 100p target.
The company expects second-half sales growth, with new sub-distributor programmes, closer OEM collaboration and regional expansion.
Eleven percent fewer cubic metres left the factory. Roughly the same number went into buildings.
Source: AskTraders, “Accsys Shares Slide 11% as FY27 Trading Update Disappoints”
