Polypipe posts record operating margin in first half

Plastic piping and ventilation systems manufacturer Polypipe Group announced its half year unaudited results for the six months to 30 June on Tuesday, with revenue 31% higher at £223.3m.

The FTSE 250 firm said its UK revenue for the period was 8.1% ahead, excluding acquisitions, while its underlying operating profit was 47% higher at £37.7m.

It made a 180 basis point improvement in underlying operating margin to a record 16.9%, while underlying earnings per share were 48% higher at 13.6p.

Polypipe’s reported cash generated from operations during the first half was 71% higher at £30.5m, and its net debt was down to 2.3x pro-forma LTM EBITDA.

Its board declared an interim dividend increased by 35% to 3.1p.

On the operational front, Polypipe said demand from all segments of its core UK market has remained strong, with continued progress in growth initiatives of substitution, carbon efficiency and water management.

The Nuaire acquisition was performing well, and the board said there had been some early success in specification of Nuaire systems with Polypipe duct.

Polypipe also made its first delivery from the manufacturing plant in Dubai during July.

“We have delivered another record performance in the first half continuing the strong momentum from last year,” said chief executive David Hall.

“Our strategic focus on the structural growth opportunities, together with the acquisition of our Nuaire ventilation business has accelerated our growth.”

Hall said despite an uncertain economic backdrop given Brexit, the long-term structural drivers of the business remained strong, with Polypipe’s “balanced business model” meaning it is not overly exposed to any particular sector.

“The nature of the group's production processes enables us to adapt and flex quickly to changes in demand,” he explained.

“The board is confident that the cash generative characteristics of the business and a commitment to remain agile will enable the group to continue to develop and outperform, whatever the market conditions.”