Breedon (BREE) delivered a peculiarly meteorological trading update at its AGM. Shareholders might not have been anticipating too many surprises as the first quarter (Q1) tends to be a relatively subdued affair, but matters were slightly damper this time around. UK building teams have been forced to repeatedly down tools due to a prolonged period of wet weather. Combined with the general economic malaise, it meant that Q1 revenues fell by 9 per cent on a like-for-like basis – hardly an auspicious start to the year.
With interest rate cuts still on the backburner, the group’s management was reluctant to highlight any signs of a nascent revival in the housing and construction markets, although chief executive Rob Wood pointed out that the March quarter is “the least significant trading period for Breedon and our industry”. According to the Office for National Statistics, total annual construction output in the UK increased by 2.0 per cent in 2023 compared with the previous year, but that was entirely due to a rise in unavoidable repair and maintenance activity – new work volumes decreased by 2.1 per cent.
Yet it’s probably worth re-examining the construction materials group's prospects nearly one year on from its elevation to the Main Market of the London Stock Exchange. Its recent foray into the US aggregates and concrete markets through the acquisition of BMC Enterprises Inc. for an enterprise value of $300mn (£238mn) is worth paying particular attention to.