Breedon Aggregates delivered a solid first-half performance and, while turnover remained flat, profits rose sharply – as a result of cost cutting measures. Moreover, attention is focusing on whether Breedon could buy the assets that are up for sale as part of the merger between Tarmac and Lafarge – leaving the shares looking attractive.
Last year's G&G Concrete acquisition has been fully integrated and, more recently, the group bought Nottingham Readymix. But Breedon is also sizing up the cement plants and quarries on sale as a result of the merger between Tarmac and Lafarge, with other major aggregate players – such as Cemex – likely to be ruled out on competition grounds.
Trading conditions remained tough, though, with construction activity falling 4 per cent in the first quarter alone. But turnover held up well against some pretty favourable comparatives, bloated by a backlog of work caused by the poor weather at the end of 2010. And robust cash generation, together with a share placing in April that raised £15m, helped to reduce the net debt burden from £96.2m at the end of last year to £81.8m.
Peel Hunt expects full-year adjusted pre-tax profit of £4.1m, giving adjusted EPS of 0.6p (2011: £1.4m/0.2p).
| BREEDON AGGREGATES (BREE) | ||||
|---|---|---|---|---|
| ORD PRICE: | 24p | MARKET VALUE: | £155m | |
| TOUCH: | 23-24p | 12-MONTH HIGH: | 25p | LOW: 16p |
| DIVIDEND YIELD: | nil | PE RATIO: | 48 | |
| NET ASSET VALUE: | 12p | NET DEBT: | 108% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 84.7 | 0.42 | 0.06 | nil |
| 2012 | 83.0 | 2.73 | 0.35 | nil |
| % change | -2 | +550 | +483 | - |
Ex-div:- Payment:- | ||||
