Breedon reports record year as it beats pre-Covid numbers

Construction materials company Breedon reported a 33% improvement in statutory revenue in its final results on Wednesday, to £1.23bn, which was also 33% higher than the pre-Covid comparator in 2019.

The AIM-traded firm said statutory EBIT was £127.4m for the year ended 31 December, which was 107% higher than in 2020, and 17% higher than before the pandemic in 2019.

Underlying EBIT was up 75% year-on-year and 15% higher than two years ago at £133.6m, while its underlying EBIT margin rose to 10.8%, from 8.2% in 2020.

Its profit before tax grew 138% year-on-year to £114.3m, while underlying basic earnings per share were ahead 77% at 4.96p.

Adjusted underlying basic earnings totalled 5.98p per share - up 90% on 2020, and 19% on 2019.

The board declared a dividend of 1.6p per share, having not paid a distribution to shareholders for 2020.

Breedon’s covenant leverage was 0.8x at year-end, compared to 1.9x a year earlier, while its post-tax return on invested capital rose to 9.5% from 5.5%.

Looking ahead, Breedon said demand remained “robust”, with long-term commitments in place from policymakers to fund infrastructure and construction.

It said forecasters were predicting “mid-single digit growth” in 2022 and, while commodity cost volatility was expected to continue, it claimed the pricing backdrop was “increasingly dynamic” with the company expecting to “fully recover” input cost increases.

The board said it was confident that Breedon would deliver profitable and cash-generative growth in 2022, in line with management expectations.

“2021 was a record year for Breedon - we navigated the second year of the pandemic successfully, supplied our customers with more materials than at any point in our history and fully integrated the Cemex assets,” said chief executive officer Rob Wood.

“This excellent outcome was achieved at a time of constant change and the response from our colleagues, adjusting to the pandemic and the volatile economic backdrop, has been outstanding.

“Breedon is maturing - there are strong demand dynamics in our markets and we have many exciting opportunities ahead of us in the current year and beyond.”

Wood said the company’s GB Surfacing business was positioned for growth, while the Cemex acquisition had been integrated and “poised” to reap the benefits of investment, as it eyed a number of bolt-on opportunities to in-fill its current footprint in Britain and Ireland.

“Further afield, we have appointed a business development director in the US as we advance our plans for a third platform.

“Breedon has come a long way in the past decade and we have a consistent track record for profitable and cash generative expansion.

“Our experienced leadership team and committed workforce operate a well-invested portfolio of assets with significant opportunities for sustainable growth,” Rob Wood said.

“We have a strong balance sheet and will continue to take a measured approach to deploying our capital, taking the time required to find the right businesses to extend our portfolio.”

At 1330 GMT, shares in Breedon Group were up 1.89% at 81p.