Breedon Group PLC November trading statement (5665H)

TIDMBREE

RNS Number : 5665H

Breedon Group PLC

25 November 2022

25 November 2022

BREEDON GROUP PLC

On track to deliver record earnings

Trading in line with expectations

Breedon Group plc ("Breedon" or the "Group"), a leading vertically-integrated construction materials group in Great Britain and Ireland, reports on its performance for the 10 months to 31 October 2022.

Trading performance

Trading conditions during the second half remained supportive, enabling the Group to fully recover rising input costs through robust pricing and disciplined cost management. In the four months to October 2022, the Group delivered revenue growth of 16% compared to the same period in 2021. This resulted in Group revenue of GBP1,186m in the year to date, some 14% ahead of the equivalent reported period last year and 12% on a like-for-like(1) basis.

Successful implementation of our dynamic pricing strategy has offset the impact of softer market volumes. While our volumes are behind the exceptional levels recorded during the post-Covid recovery in 2021, they remain ahead of 2019 on a like-for-like(1) basis.

The Group continued to generate strong free cash flow and is on track to deliver year-end covenant leverage comfortably below 1x.

Highlights

 
 --   In GB, as well as delivering a strong operational performance, 
       we advanced the business strategically. In surfacing, we were 
       delighted to be awarded a place on the National Highways Pavement 
       Delivery Framework, North Super Region and we acquired Thomas 
       Bow, an East Midlands surfacing business. In materials we are 
       in the process of commissioning our new Mansfield asphalt plant 
       and we expanded our capability to include marine sand dredging 
       through the acquisition of Severn Sands. 
 --   In Ireland, activity in RoI accelerated in line with normal 
       seasonal trends. The pace of activity in Northern Ireland continues 
       to be impacted by the absence of the governing Assembly; nonetheless, 
       we were pleased to be awarded a number of framework contracts. 
 --   The Cement business performed well and at our Hope plant we 
       completed the scheduled maintenance of the second kiln, on 
       time and to budget. 
 --   We have made further progress on our sustainability ambitions. 
       Achieving our highest ever rates of alternative fuels substitution 
       and biomass usage together with expanding the production of 
       reduced clinker cement; all contributing to further reductions 
       in our carbon intensity. 
 

Outlook

The Group is on track to deliver record earnings in 2022. While construction output has softened in the second half, the majority of our end-markets remain resilient, with infrastructure and industrial markets continuing to deliver growth. Consequently, we expect to deliver full year results in line with expectations as set out with our interim results.

While the short-term economic outlook limits visibility for the sector, our longer-term prospects remain well-underpinned by structural growth dynamics, and our exposure to infrastructure, housing and industrial end-markets is favourable. Independent of market conditions, there are many opportunities for progression within our control; optimising our assets, executing our active M&A pipeline in GB and Ireland and continuing to recover input cost inflation through our dynamic pricing strategy.

Rob Wood, Chief Executive officer, commented :

"This time last year we reminded our investors of the agile and entrepreneurial DNA that sets Breedon apart. Our rapid response to changing market conditions, local focus, vertically-integrated business model and disciplined financial framework will again enable us to deliver record results.

"Visibility in the trading landscape has been poor for some years now, for a variety of reasons. Against this constantly changing backdrop, our team's commitment and resolve have delivered quality products and great service to our customers, regardless of the economic or political landscape. For this, we thank them. Their focus and determination in turn continues to deliver for all our stakeholders."

Notes

   1.   Like-for-like reflects reported values adjusted for the impact of acquisitions and disposals. 
 
 
   ENQUIRIES 
                                             +44 (0) 1332 
 Breedon Group plc                                 694010 
 Rob Wood, Chief Executive Officer 
  James Brotherton, Chief Financial 
  Officer 
 Louise Turner-Smith, Head of Investor       +44 (0) 7860 
  Relations                                        911909 
                                          [phone] 
 Numis (NOMAD and joint broker)                      1000 
   Ben Stoop 
    Oliver Hardy (NOMAD) 
                                          [phone] 
 HSBC (Joint broker)                                 8888 
   Sam McLennan 
    Joe Weaving 
                                          [phone] 
 Teneo (Public relations adviser)                    3180 
   Nick de Bunsen 
    Elizabeth Mobed 
 

About Breedon Group plc

Breedon Group plc, a leading vertically-integrated construction materials group in Great Britain and Ireland, delivers essential products to the construction sector. Breedon holds around 1bn tonnes of mineral reserves and resources with long reserve life, supplying value-added products and services, including specialty materials, surfacing and highway maintenance operations, to a broad range of customers through its extensive local network of quarries, ready-mixed concrete and asphalt plants.

The Group's two well-invested cement plants are actively engaged in a number of carbon reduction practices, which include utilising alternative raw materials and lower carbon fuels. Breedon's c.3,600 colleagues embody our commitment to 'Make a Material Difference' as the Group continues to execute its strategy to create sustainable value for all stakeholders, delivering growth through organic improvement and acquisition in the heavyside construction materials market.

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November 25, 2022 02:00 ET (07:00 GMT)