Polypipe delivers in tough UK market; closes Dubai factory

Revenue rose 6.3% to £411.7m, while underlying operating profit was up 6% at £72.6m, the company said.

The underlying operating margin was 17.6%, down from 17.5%, despite continued input cost inflation, it added.

A final dividend of 7.5p a share was declared for a full year payout of 11.1p a share, up 9.9%.

While UK revenues increased 8.1% to £365.7m, Polypipe said there was evidence that project starts continue to be delayed in the current term, “impacting performance in our commercial and Infrastructure systems segment in the early part of the year”.

The collapse of government contractor Carillion's in January “may potentially lead to further project delays as main contracts are renegotiated and the impact on sub-contractors works through the market” it said.

Chief executive Martin Payne said the collapse in sterling after the EU referendum decision in 2016 meant the company would again need to “pass-through polymer and other cost inflation seen during 2017 and into early 2018”.

“Whilst doing everything we can to alleviate the need for selling price increases, we are confident that our customers expect us to pass on essential increases, and we expect to see the benefit of these price increases coming through as we move into the second quarter of 2018,” he said.

The company added that it was closing down its Dubai factory as the trade embargo on Qatar by neighbouring Gulf states showed no signs of easing.

“Whilst the Middle East still represents a significant opportunity for the group, we have decided to pursue an alternative manufacturing strategy in the region through use of sub-contractors and to close permanently our Dubai manufacturing facility,” Payne said.

“All equipment will be relocated back to our Horncastle plant where Polystorm is manufactured for the UK market, enabling us to remove the need for more expensive sub-contract manufacturing in the UK.”

“A further non-underlying charge of £3.1m has been recorded covering machinery relocation costs, further redundancy, onerous lease costs and asset impairments, leaving the total non-underlying charge for the year at £40m, of which £1.7m is non-cash.”

Polypie in January said it was selling its French business for €16.5m

and expected to complete the deal in the first half of 2018.