Breedon turns in robust first-half performance

Construction materials firm Breedon reported a robust first-half financial performance on Wednesday, with revenue rising 11% year-on-year to £742.7m.

The London-listed company did, however, record a decline in statutory EBIT of 5% to £62.1m, and a decrease in the EBIT margin of 140 basis points to 8.4%.

Profit before tax also declined, by 5% on a statutory basis to £56.5m, while basic earnings per share on the same basis were 10% weaker at 14.5p.

The underlying highlights painted a more positive picture, with EBIT on that basis up 5% at £70.5m, while the underlying EBIT margin declined 50 basis points to 9.5%.

Profit before tax experienced a more substantial increase of 7% on an underlying basis, to £64.9m, while basic earnings per share showed growth of 2% to 15.3p.

Breedon Group said it made considerable progress in reducing its net debt by 14%, to £220.4m, while it maintained a steady return on invested capital of 10%.

The group said it invested in three strategic bolt-on acquisitions and achieved a lower covenant leverage of 0.7x, primarily due to the management of seasonal working capital outflow, inventory control, and strong cash collection.

In line with its progressive dividend policy, Breedon’s board increased its interim dividend by 14% to 4p per share.

Looking ahead, Breedon said it remained confident as it navigated through an uncertain economic landscape.

It said its emphasis on operational excellence and agility had positioned it well for the second half, as it maintained its full-year expectations.

“In the first half our vertically-integrated and local operating model has again come to the fore, leveraging our long-term customer relationships and deep market knowledge,” said chief executive officer Rob Wood.

“The long-term structural dynamics driving infrastructure spending and housebuilding in Great Britain and Ireland have not changed.

“To ensure we can efficiently and sustainably meet long-term demand for our essential construction materials, we have re-doubled our focus on those factors under our control; keeping our people safe and well while minimising the cost of production and maximising the value of the extensive portfolio of assets we own and acquire.”

At 0905 BST, shares in Breedon Group were up 2.92% at 363.3p.

Reporting by Josh White for Sharecast.com.