Growing demand for aggregates, asphalt and ready-mixed concrete helped Breedon Aggregates (BREE) deliver a very strong first-half performance. Acquisitions contributed around half of the growth in profits, and management has indicated that full-year results are likely to exceed market expectations.
One of Breedon's key attractions is the level of operational gearing. So while sales were up by just over a quarter, pre-tax profits nearly doubled. Aggregates sales rose by a quarter to 4.5m tonnes, and sales of asphalt and ready-mixed concrete were also higher. Revenue growth was more pronounced in the group's English operations, and maintenance spending in Scotland remained relatively benign. Despite this, the group has managed to secure several new contracts, including work on the A9 road and surfacing of the new Forth Crossing.
Breedon is also investing to improve output, and has implemented a major upgrade to the crushing equipment at the Cloud Hill quarry, while two asphalt plants bought from Hope Construction Materials have been refurbished. The company generated £17.5m in cash from operating activities, which helped to cut debt from £66.3m at the end of December 2014 to £58.3m at the end of June this year.
Analysts at Numis have upgraded their forecasts and now expect full-year pre-tax profits of £30m and EPS of 2.2p (from £21m and 1.5p in 2014).
| BREEDON AGGREGATES (BREE) | ||||
|---|---|---|---|---|
| ORD PRICE: | 54.5p | MARKET VALUE: | £565m | |
| TOUCH: | 54-55p | 12-MONTH HIGH: | 58p | LOW: 40p |
| DIVIDEND YIELD: | nil | PE RATIO: | 24 | |
| NET ASSET VALUE: | 18p | NET DEBT: | 32% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 125 | 9.1 | 0.7 | nil |
| 2015 | 161 | 17.5 | 1.3 | nil |
| % change | +28 | +92 | +86 | - |
Ex-div:- Payment:- | ||||
