Breedon's full-year trading performance

Breedon's full-year trading performance
09 March 2016


Breedon Aggregates Ltd reported continued improvement in trading performance for full-year 2015, with record results from both England and Scotland.

Group revenue increased by 18.1 per cent to GBP318.5m as the UK construction sector continued to recover. Breedon reported that trading conditions in England remained stronger than in Scotland, but both divisions delivered record results in 2015. 

Group underlying EBITDA increased to GBP54.9m and its underlying EBITDA margin improved to 17.2 per cent compared to 14.3 per cent last year. Underlying EBIT margin for 2015 was 11.9 per cent compared to nine per cent in 2014.

Peter Tom, executive chairman, commented:  “2015 was another significant year for Breedon. Our trading performance continued to improve and we again reported record results."

UK construction market
Market conditions continued to be favourable during the year, although construction output growth of 3.4 per cent was lower than the 7.5 per cent achieved in 2014. 

A slowdown in the third quarter proved to be temporary and demand recovered, with a positive finish to the year driven by infrastructure work. The labour market remained strong, with the number of people in employment growing to nearly 74 per cent, the highest since records began in 1971.

Despite the recovery, it is noteworthy that both construction output and product volumes still remain well below pre-recession levels.

During the year Breedon sold 8.7Mt of aggregates (2014: 7.7Mt), 1.8Mt of asphalt (2014: 1.5Mt) and 0.9Mm3 of ready-mixed concrete sold (2014: 0.8Mm3).

The company reported a strong finish to the year, although wet weather and flooding in December impacted activity in Scotland, particularly in the Aberdeen area. Further declines in the price of fuel oil and related products also helped to reduce its cost base. 

Investment and development
During the year Breedon approved projects in excess of GBP20m, including the replacement of two asphalt plants in Scotland, a new crushing plant at the company's largest quarry in the Midlands and a new concrete plant at Tewkesbury.  It also reached agreement to re-open a former quarry in north Wales and expects to shortly commence production of sand and gravel at a new site near Northampton.

A year of major investment
The former Barr business received significant additional investment following its acquisition in 2014 and this has already started to pay dividends in improved efficiency and cost reduction, Breedon noted. Other significant investments during the year included a new crushing train and block production plant at Naunton and updates to our fleet with the purchase of a number of new mixers and tippers.

Hope Construction Materials
In November Breedon announced the planned GBP336m acquisition of Hope Construction Materials Ltd. The transaction is subject to the approval of the UK's Competition and Markets Authority and the company expects to secure this towards the middle of this year. The acquisition of Hope represents a major step forward for Breedon Aggregates, almost doubling the size of its business.

Largest ever contract win finalised
At the end of last year the company finalised its largest ever contract win (worth GBP55m) to supply and lay asphalt for the Aberdeen Western Peripheral Route, the largest road improvement scheme in the UK, in partnership with Whitemountain Quarries Ltd. "This contract was awarded in early 2016 and will help to underpin the performance of the Scottish business for the next two years," Breedon noted.

Outlook
Breedon believes the outlook continues to be encouraging. Mr Tom notes: "The Government remains committed to infrastructure investment and all the relevant forecasting bodies predict modest but sustained growth of around four per cent in construction over the next few years. This means a steady growth in demand for our products, with the MPA forecasting growth in aggregates volumes this year of around four per cent, asphalt volumes up by around one per cent and concrete up by around three per cent. Against this background, volumes are expected to recover gradually to pre-recession levels by 2020."

Published under Cement News

Tagged Under: Results UK Breedon Aggregates