Gordon Stein, CFO of CleanTech Lithium, explains why CTL acquired the 23 Laguna Verde licenses. Watch the video here.
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you need to buy before ex-div date, buying on ex-div date means you miss the dividend. he was prob restricted from buying before the div date.
Ha ha good old Jude, in for the Dividend yesterday
ex-div date tomorrow, so might see some upward momentum afterwards.
where is the bottom?
I have no idea whether it will go up or down in the short term but the latest UK Construction stats were positive and we know that this is a company with decent long term prospects.
The big issue will be UK govt policy and one can make arguments for both positive and negative change. My biggest concern is a reduction in govt capital spending to pay for reductions in tax, though the lack of infrastructure spending over the last 20 years is becoming increasingly apparent. Is Truss a populist like Johnson or a more strategic thinker?
I have no idea whether it will go up or down in the short term but the latest UK Construction stats were positive and we know that this is a company with decent long term prospects.
The big issue will be UK govt policy and one can make arguments for both positive and negative change. My biggest concern is a reduction in govt capital spending to pay for reductions in tax, though the lack of infrastructure spending over the last 20 years is becoming increasingly apparent. Is Truss a populist like Johnson or a more strategic thinker?
Not that long ago, Breedon was, for nearly a year, the top gainer in my portfolio. These days, it's just another footnote, albeit I'm still 7% up. Doubtless the market cap will recover, once construction activity returns to normal. Meanwhile, we can probably look forward to its languishing in the usual 60-70p range for the next couple of years. The only silver lining is the divi.
Thank you londoner 7 on your take on the interims , a interesting read and a very constructive and knowledgeable reply . I went and looked at the results presentation again and its surprising how you can miss things 1st time around . After feeling a little disappointed im now a bit more optimistic about prospects for the 2nd half and going forward . james and rob are winning me over and i liked there positivity especially the prospect of better ebit margins .My biggest concern is how they can manage the dedt with dividends and Aquisitions increasing .
Hi Londoner7,
thank you for your clear and thoughtful insights, as always.
Like you I am surprised with the working capital movements. it led to negative FCF.
Taking the long term view, i believe BREE will become a more dominant force in the years ahead.
As for this year's and next year's results, we will have to expect that they might take a hit. But we have always have to remember that in some industries market power can be counter cyclical and that means that margins could increase even if volumes decrease. the net effect can go wither way.
As for the SP, Mr Market is being very cautious. I still thought this could go up above 100p, before the HY results, but clearly he is not in buying mode.
hope you are well.
atb,
L3
p.s.: isn't it great when a company does not have a "problem child"? -:)
(Follow on from my post on Interims)
I was encouraged by Rob’s comments on current business activity. (I recommend you listen to the presentation and the following interview posted on their web page) But July construction PMI points to headwinds and the Q2 MPA release is a grim read and seemingly at odds with positive (to May) ONS construction data – perhaps the June ONS number due in a couple of weeks will show a decline.
https://www.mineralproducts.org/News-CEO-Blog/2022/release28.aspx
It wouldn’t be the first time that Breedon has advanced against headwinds. But will we see headwinds or a full-on hurricane. Place your bets.
Hi spogbat, you ask for my take on the interims.
A few months back I posted my expectations for the full year. Much has happened since 16th Mar when I worked my numbers but in the absence of hard data, I hadn’t revisited my numbers. A key line was, “I expect revenue growth of c10% largely due to pricing, and a 12.0% to 12.5% EBIT margin.”
At the interim stage it looks like I’ll miss on both counts. While revenue will be higher than my forecast, it will include little if any volume growth, and the lack of volume growth will be a challenge to margins. Anyone familiar with the implications of fixed costs will understand the challenge of maintaining margins on reduced volumes, so for Breedon to have increased margins on reduced volumes implies very favourable pricing over costs. The CFO inferred a 6% reduction in blended volumes. All other things being equal I calculated this level of reduction to impact margin by c0.5%, assuming fixed costs in the 30-70% range. That’s a wide estimate but sufficient for my needs. The fact that margin increased by 0.8% is a good outcome, though I’ve no idea if this is due to pricing or efficiency gains. That lack of clarity will extend into H2, but CFO guidance was for 49%/51% H1/H2 split on revenue and better profitability in H2.
My base case is now for a slight beat on the guided top end of EBIT forecast range (in interview the CFP explicitly referred to £149m as an expectation) EBIT is the key metric to the EPS outcome, which is 6.8p on associated analyst forecasts, and implies a margin c.10.8%. With a following wind I can see margin on a 11% handle and EPS on a 7p handle.
You refer to a hike in debt. I think the CFO covered this well in his presentation. The big changes were working capital and CapEx. The increase in working capital surprised. This is a seasonal item largely unwound by the end of the year, but the CFO indicated a c£35m increase at year end. However, his explanations seemed reasonable – the impact of inflation and the cash purchase of future carbon credits given the poor pricing on financial instruments.
Rather than a debt number I prefer to focus on free cash flow generated by the business. Definitions vary and I adjust depending on sector, but for Breedon here’s my expectation for the full year.
Net debt position – the CFO guided £145 so a reduction of £67.5m on the 2021 YE number.
Dividend cash payments - £18.6m+£11.9m = £30.5m
Organic growth CapEx – previously Rob has guided to 50% depreciation to maintain the business with the balance organic investment. Using this I have £100m-£42m = £58m
Acquisitions – none were made in H1 but £10m was spent ahead of the results. Does the CFO account for this in his £145m guidance? I’ll assume no.
2022 FCF = £156m. A 14% yield at today’s price (I’ve excluded debt given the relatively low interest charge)
Thanks londoner 7 , Informal has ever . Yes i did spot in the news feed on there wwbsite about the Aquisition but even that seemed an afterthought being dated the 1st which was monday , I know its not a biggy in size but a very important step into the marine aggregate market . It will be interesting to find out the cost of this deal , I wouldn't like to say hiw much a dredger costs or dredging licences? Will also be interested to have your take on the interim results Londoner 7 , The hike in dedt was a little conserning to me .
Hi spogbat,
first, thanks to you and AI for highlighting these acquisitions.
To your question. My take from the latest update is that there is a good pipeline of potential acquisitions from small, like the three we've seen recently, to some more substantial. I'm guessing perhaps c£50-100m. I'd guess rather than RNS acquisitions which are c£5-10m cost and each relatively inconsequential to the bigger picture - though combined they become significant - Breedon will RNS the big ones with more detailed financials than we are seeing reported for these smaller ones.
Key, is that the current focus is on GB/ROI tie ins, rather than a move into the US. I guess a US move is 2023 earliest.
I note that this latest acquisition is reported on Breedon's website news section. The inconsistency is that the one you spotted wasn't.
Anyone know why these Aquisitions are not getting announced ? Surely has investers in the company it would be nice to know whats going on , doesn't make sense to me .
Severn Sands Acquisition
https://www.marketscreener.com/quote/stock/BREEDON-GROUP-PLC-4008531/news/Breedon-acquires-Severn-Sands-Limited-41163402/
Third acquisition in as many weeks
Dazzag
I hear what you are saying and I was also hopeful the sp may have reacted favourably but looks like reaction to results has been a little underwhelming
Bree are my largest holding by far so I’m hoping Allianz are right
GLA
You better tell Allianz Global Investors GmbH then who just took up a 3% investment ha ha
There are many things not to like, while revenues are recovering up vs H1-2021, variable costs are increasing at the same and a bit higher rate, situation with administrative expenses is even worse (double growth rate).
There's no margin of safety or naked-eye growth factors to justify capital deployment for new investors.
What's not to like about these interims? Solid well-protected business with increasing dividend.
Like the results, 40% increase in interim dividend nice too
Expect full-year earnings at top end of current market expectations
Here’s
And heading down!! Has someone some knowledge already?.
Hears hoping for some good news GLA
Results out tomorrow.
Saw that, German investment company picking up 3% of the shares