14 Nov 2017 07:00
Polypipe Group plc
Trading Update
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14 November 2017
Polypipe Group plc ("Polypipe", the "Company" or the "Group"), a leading manufacturer of plastic piping and ventilation systems for the residential, commercial, civils and infrastructure sectors, today issues an update on trading for the ten months ended 31 October 2017.
Trading update
Strong organic growth in our UK Residential Systems and Mainland Europe segments, both helped by relatively buoyant new house building activity, has driven continued growth ahead of the market in the ten months ended 31 October 2017, leaving the Group on track to achieve management expectations for the full year.
Revenue for the ten months ended 31 October 2017 was 8.2% higher than the prior year at £400.6m (2016: £370.3m), and 7.1% higher on a like for like* basis. Like for like revenue growth in the four months to 31 October 2017 was marginally higher than that recorded in the first half of the year at 7.3%.
The following table sets out Group revenue by operating segment:
Ten months ended 31 October | Four Months ended 31 October 2017 | |||||||||
2017 |
2016 |
Change | LFL Change* | LFL Change* | ||||||
Revenue | £m | £m | % | % | % | |||||
Residential Systems | 193.1 | 175.7 | 9.9 | 9.9 | 11.1 | |||||
Commercial and Infrastructure Systems - UK | 161.6 | 155.8
| 3.6 | 3.6 | 1.0 | |||||
Inter-segment sales
| (11.3)
| (8.8) | ||||||||
UK operations | 343.4 | 322.7 | 6.4 | 6.4 | 6.0 | |||||
Commercial and Infrastructure Systems - Mainland Europe |
58.9 |
49.0 |
19.9 |
11.2 |
16.0 | |||||
Inter-segment sales |
(1.7) |
(1.4) |
| |||||||
Group |
400.6 |
370.3 |
8.2 |
7.1 |
7.3 | |||||
*Like for like (LFL) measures are at constant currency translation. The structure of the Group is the same in both periods so no adjustment is necessary for acquisitions or disposals.
UK operations
Our UK operations achieved revenue growth of 6.4% in the ten months ended 31 October 2017. The price increases implemented progressively throughout the first half of this year account for approximately 3.0%, leaving volume growth at 3.4%, ahead of the market.
Revenue in our UK Residential Systems segment increased 9.9% compared to the same period last year, driven by continued strong demand from new housebuild, with strong underground demand beginning to be matched latterly by strengthening demand for above ground products as developers start to build out newly developed sites. Both private and public RMI markets remain difficult. Our UK Commercial and Infrastructure Systems segment delivered solid growth of 3.6%, for the ten months ended 31 October 2017 despite strong comparables, delays in some of the larger roads and commercial building projects in the UK, and the continued issues in the Middle East. Our manufacturing facility in Dubai (for which the results are reported in this UK segment) remains closed, and the Qatar situation shows no sign of improving. A limited number of small projects outside Qatar continue to be supplied from Dubai and the situation regarding manufacturing in Dubai remains under review.
Second half UK operating margins will be higher than in the equivalent period in 2016 following first half price increases to recover post EU Referendum polymer and other inflationary cost increases. However, further polymer cost inflation driven by currency movements and tightening global supply during the year means that full year operating margins in the UK will be marginally behind the prior year. Further price increases are planned for the new year to recover this cost inflation.
Mainland European operations
Revenue for the ten months ended 31 October 2017 was 19.9% ahead of the prior year, and on a like for like basis was 11.2% ahead. The general economic environment in France continues to be helpful with our business capitalising on this and performing well. The business continues to be profitable but at lower margins than the UK.
Martin Payne, Chief Executive Officer, commented:
"Whilst the UK new housebuild market continues to perform well helped by increasing demand for our water management and attenuation products, commercial, infrastructure and RMI markets remain challenging. Against this backdrop, the Group continues to deliver strong organic growth ahead of the overall UK construction market, demonstrating the resilience of its balanced exposure to the different sectors within that market, and the continued success of its strategic growth pillars of legacy material substitution and legislative tailwinds in water management and carbon efficiency. Whilst we remain vigilant in the face of continued political and economic uncertainty, we believe the Group is well placed to achieve management expectations for the full year."
For further information, please contact:
Enquiries:
Polypipe +44 (0) 1709 770 000
Martin Payne, Chief Executive Officer
Brunswick +44 (0) 2074 045 959
Tim Danaher
Will Rowberry
Notes to Editors:
Polypipe is the largest manufacturer in the UK, and among the ten largest manufacturers in Europe, of plastic piping systems for the residential, commercial, civils and infrastructure sectors by revenue. It is also a leading designer and manufacturer of energy efficient ventilation systems in the UK.
The Group operates from 20 facilities in total, and with over 20,000 product lines, manufactures the UK's widest range of plastic piping systems for heating, plumbing, drainage and ventilation. The Group primarily targets the UK, French and Irish building and construction markets with a presence in Italy and the Middle East and sales to specific niches in the rest of the world.