A GLASGOW-based bathroom and kitchen surface manufacturer has declared it is on course to return to its pre-Covid level of performance next year, despite contending with a sharp rise in costs linked to the Russian invasion of Ukraine.

Rearo, which makes high-pressure laminate wall panels and worktops for the public and private sectors, has forecast it will turn over £10.5 million in the year to June 2024, underlining its success in moving into new sectors such as hospitality, healthcare, and education. It turned over £8.5m last time.

The firm said income is up £500,000 on the same period 2022 but still almost £1m below target, with the cost of some raw materials doubling since the start of the year amid the fall-out from war in Ukraine.

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Rearo said the conflict had cut off supplies of the company’s main raw material, birch plywood, as a result of the trade embargo and sanctions imposed on Russia in response to the invasion. The company said it switched to exterior grade MDF, sourced from “sustainably managed forests in Ireland”, though continues to source some birch plywood from Finland.

Managing director Graham Mercer said: “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.”

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Rearo, which supplies fast food restaurants, supermarkets, and high street chains across the UK, had a tumultuous time during the pandemic.

While the company supplied key infrastructure projects such as the NHS Louisa Jordan Hospital in Glasgow, set up to help the health service absorb the enormous pressure created by Covid-19, its commercial operations were affected as many large private and public projects were put on hold and sites were shut down.

Rearo said it was able to offset some of the loss of commercial revenue with an uptake in domestic sales, as people invested in DIY projects because they were spending more time at home during lockdowns.

Mr 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 £10.5m.”

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Rearo has a 67,000 square foot manufacturing base in Govan, with showrooms and distribution centres in Fife, Tyneside, and Northampton, as well as a new branch in Skelmersdale, Lancashire, which opened earlier this year. Clients have included McDonald's, Amazon, Microsoft, Asda, Bank of Scotland, Cambridge University, the University of Strathclyde, and Glasgow and Edinburgh airports.

The company also services public and third sector contracts for schools, local authorities, and housing associations.

Rearo noted that it has been striving to drive sales by introducing add-on product lines such as wash troughs and new laminate finishes, incorporating anti-fingerprint technology and soft matte surfaces.

It has sought to cut costs by signing fixed contracts for supplies of electricity and gas.

The exterior grade MDF it is now employing is said to be chepaer and more environmentally friendly than birch plywood.