Breedon Aggregates (BREE), the UK's largest independent aggregates company, has beaten City forecasts after a scorching end to the first half easily offset a poor start to the year. Admittedly, last summer's rain and Olympics distractions made comparisons easier - but underlying cash profit still leapt by over a third to £13m, and rose an impressive 18 per cent even before acquisitions.
A strong grip on costs, stable pricing and early benefits of recent acquisitions drove underlying cash profit margin up by 120 basis points to 12.9 per cent. Hitting its 15 per cent target will depend on an upturn in construction output - there are encouraging signs here - and further housing market recovery. Of course, growth in the coming quarters is unlikely to be as dramatic as the previous three months, and local authority thrift is holding back the asphalt business. Still, management believes like-for-like volumes elsewhere will be better, and both the order book and enquiries are "good". There's a renewed political commitment to invest more in infrastructure, too, and pot holes have soared up the agenda at a local level. An Office of Fair Trading (OFT) investigation into acquisitions in Scotland reports in September. At worst, a few concrete plants may have to go.
Broker Cenkos Securities is tinkering with estimates, but expects its forecast for full-year underlying pre-tax profit of £9.5m to go "marginally upwards", giving underlying EPS of 0.9p (from £5.6m and 0.7p in 2012).
BREEDON AGGREGATES (BREE) | ||||
|---|---|---|---|---|
| ORD PRICE: | 27p | MARKET VALUE: | £256m | |
| TOUCH: | 27-27.5p | 12-MONTH HIGH: | 28p | Low: 20p |
| DIVIDEND YIELD: | nil | PE RATIO: | 28 | |
| NET ASSET VALUE: | 15p* | NET DEBT: | 51% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 83.0 | 2.73 | 0.35 | nil |
| 2013 | 100 | 4.37 | 0.45 | nil |
| % change | +20 | +60 | +29 | - |
Ex-div: - Payment: - | ||||
