Revenue and earnings flow higher at Polypipe

The FTSE 250 company said its underlying operating profit was 28% higher year-on-year at £69.4m, as its underlying operating margin improved 50 basis points to 15.9%.

Underlying profit before tax was £61.8m, up 28.8%, and the firm’s operating profit was 25.5% higher at £62m.

It reported a profit before tax of £54.4m, rising 31.1% from 2015’s results.

Diluted earnings per share were 29.2% higher at 22.1p, while underlying diluted earnings per share rose 28.9% to 25p.

The company generated £86.5m cash from operations during the year, a 19.1% improvement over 2015, and the board confirmed dividends per share of 10.1p, up 29.5% year-on-year.

On the operational front, Polypipe’s board put the revenue growth down to “continued strong demand” for the company’s products, with no discernible impact of the EU referendum on its end markets thus far.

Its legacy material substitution and legislative tailwinds were driving growth ahead of the overall UK construction market, and the Nuaire business was successfully integrated into the group, now performing in line with expectations.

Polypipe’s Middle East manufacturing plant was commissioned and was in full operation in the second half of the year.

The company also posted “significant” growth in export revenue, up by 28.7%.

Looking ahead, the board said its underlying fundamentals and growth prospects in the overall UK construction market remained positive, with the level of economic uncertainty easing since the immediate reaction to the outcome of the EU referendum.

The board said it still remained alert to market risks, however.

It also said the impact of selling price increases, due to the increase in base polymer and other costs, was expected to come through from the second quarter of the current year, but it still anticipated delivering its planned margin for the full year.

“Our record performance during 2016 and continuing growth underscores the strength of the Polypipe business model and the robust fundamentals underlying the majority of our market segments,” said chief executive David Hall.

“In a period of heightened political and market uncertainties, Polypipe continued to focus on its priorities and delivered results toward the top end of our expectations.

“The combination of forecast market growth, our focus on executing our strategic development initiatives and resolve to recover input cost inflation mean that we look forward to 2017 being a further year of progression for the group.”