Last checked at 25 Nov 2022 07:00
25 November 2022
BREEDON GROUP PLC
On track to deliver record earnings
Trading in line with expectations
Breedon Group plc ("Breedon" or the "Group"), a leading vertically-integrated construction materials group in Great Britain and Ireland, reports on its performance for the 10 months to 31 October 2022.
Trading performance
Trading conditions during the second half remained supportive, enabling the Group to fully recover rising input costs through robust pricing and disciplined cost management. In the four months to October 2022, the Group delivered revenue growth of 16% compared to the same period in 2021. This resulted in Group revenue of £1,186m in the year to date, some 14% ahead of the equivalent reported period last year and 12% on a like-for-like1 basis.
Successful implementation of our dynamic pricing strategy has offset the impact of softer market volumes. While our volumes are behind the exceptional levels recorded during the post-Covid recovery in 2021, they remain ahead of 2019 on a like-for-like1 basis.
The Group continued to generate strong free cash flow and is on track to deliver year-end covenant leverage comfortably below 1x.
Highlights
• | In GB, as well as delivering a strong operational performance, we advanced the business strategically. In surfacing, we were delighted to be awarded a place on the National Highways Pavement Delivery Framework, North Super Region and we acquired Thomas Bow, an East Midlands surfacing business. In materials we are in the process of commissioning our new Mansfield asphalt plant and we expanded our capability to include marine sand dredging through the acquisition of Severn Sands. |
• | In Ireland, activity in RoI accelerated in line with normal seasonal trends. The pace of activity in Northern Ireland continues to be impacted by the absence of the governing Assembly; nonetheless, we were pleased to be awarded a number of framework contracts. |
• | The Cement business performed well and at our Hope plant we completed the scheduled maintenance of the second kiln, on time and to budget. |
• | We have made further progress on our sustainability ambitions. Achieving our highest ever rates of alternative fuels substitution and biomass usage together with expanding the production of reduced clinker cement; all contributing to further reductions in our carbon intensity. |
Outlook
The Group is on track to deliver record earnings in 2022. While construction output has softened in the second half, the majority of our end-markets remain resilient, with infrastructure and industrial markets continuing to deliver growth. Consequently, we expect to deliver full year results in line with expectations as set out with our interim results.
While the short-term economic outlook limits visibility for the sector, our longer-term prospects remain well-underpinned by structural growth dynamics, and our exposure to infrastructure, housing and industrial end-markets is favourable. Independent of market conditions, there are many opportunities for progression within our control; optimising our assets, executing our active M&A pipeline in GB and Ireland and continuing to recover input cost inflation through our dynamic pricing strategy.
Rob Wood, Chief Executive officer, commented:
"This time last year we reminded our investors of the agile and entrepreneurial DNA that sets Breedon apart. Our rapid response to changing market conditions, local focus, vertically-integrated business model and disciplined financial framework will again enable us to deliver record results.
"Visibility in the trading landscape has been poor for some years now, for a variety of reasons. Against this constantly changing backdrop, our team's commitment and resolve have delivered quality products and great service to our customers, regardless of the economic or political landscape. For this, we thank them. Their focus and determination in turn continues to deliver for all our stakeholders."
Notes
1. Like-for-like reflects reported values adjusted for the impact of acquisitions and disposals.
ENQUIRIES | ||
Breedon Group plc | +44 (0) 1332 694010 | |
Rob Wood, Chief Executive Officer James Brotherton, Chief Financial Officer | ||
Louise Turner-Smith, Head of Investor Relations | +44 (0) 7860 911909 | |
Numis (NOMAD and joint broker) | +44 (0) 20 7260 1000 | |
Ben Stoop Oliver Hardy (NOMAD) | ||
HSBC (Joint broker) | +44 (0) 20 7991 8888 | |
Sam McLennan Joe Weaving | ||
Teneo (Public relations adviser) | +44 (0) 20 7420 3180 | |
Nick de Bunsen Elizabeth Mobed |
About Breedon Group plc
Breedon Group plc, a leading vertically-integrated construction materials group in Great Britain and Ireland, delivers essential products to the construction sector. Breedon holds around 1bn tonnes of mineral reserves and resources with long reserve life, supplying value-added products and services, including specialty materials, surfacing and highway maintenance operations, to a broad range of customers through its extensive local network of quarries, ready-mixed concrete and asphalt plants.
The Group's two well-invested cement plants are actively engaged in a number of carbon reduction practices, which include utilising alternative raw materials and lower carbon fuels. Breedon's c.3,600 colleagues embody our commitment to 'Make a Material Difference' as the Group continues to execute its strategy to create sustainable value for all stakeholders, delivering growth through organic improvement and acquisition in the heavyside construction materials market.
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