Breedon profit jumps 52% in 'productive' year

Construction materials group Breedon posted a 52% rise in 2017 profit on Wednesday as revenue grew thanks to improved performances from all three of its divisions.

In the year to the end of December, pre-tax profit increased to £71.2m from £46.8m in 2016, on revenue of £652.4m, up 43%. Underlying basic earnings per share were up 19% to 4.14p and underlying earnings before interest and tax pushed up 35% to £80.4m, including a full-year contribution from Hope Construction Materials, which was acquired in August 2016.

Meanwhile, net debt fell 31% to £109.8m and the company said it saw strong organic earnings growth, supplemented by contributions from acquisitions.

Breedon sold 16m tonnes of aggregates compared to 11.4m in 2016, while asphalt sales were steady at 1.9m tonnes and ready-mixed concrete sales rose to 3.3m cubic metres from 1.9m cubic metres the year before.

Executive chairman Peter Tom said: "2017 was one of the most productive years in our history. We completed the integration of our largest-ever acquisition, concluded two bolt-on purchases and announced an important transaction with Tarmac that, subject to approval by the competition authorities, will see us streamline our ready-mixed concrete network in exchange for a substantial new reserve of minerals and a strategically valuable asphalt plant. This did not, however, distract us from our operational focus and we once again delivered a solid financial performance.

"Our business is in great shape and we are well positioned to benefit from the medium-term growth in residential and infrastructure development, to which the majority of our material is supplied."

Numis, which lifted its stance on the stock to 'buy' from 'add' following recent share price weakness, said Breedon has delivered "an impressive" full-year performance, with earnings per share 10% ahead of its estimate.

"Whilst we leave our 2018 profit forecasts unchanged, we believe that there is scope for the group to outperform driven by both organic and acquisition-led growth. We also view Breedon's net debt performance as a particular highlight, and would note that our 2019 forecasts suggest net debt reducing to £8m."

At 1240 GMT, the shares were up 2.2% to 78.38p.