Against a backdrop of weak construction markets and a decline in new business investment, Breedon (BREE) managed to edge-up revenue by 1 per cent on a like-for-like basis last year. The building materials supplier offset a decline in sales volumes across its aggregates, asphalt, cement and ready-mix products with price increases, in response to the import inflation experienced in 2018.
Cash flow remained robust, which helped reduce net debt to 1.6 times adjusted cash profits, down from a multiple of 2 the prior year. Although free cashflow dipped due to some expected working capital reversal, the £90m produced still equated to a solid free cashflow yield of 5.8 per cent, based on the group’s current market value.
Management said it intends to pay a maiden dividend alongside the 2021 interim results. “We’ve been very much about capital growth for the last 10 years, but have now got to a stage in the cycle where we have critical mass and maturity to fund organic growth, fund acquisitions and reward shareholders,” said finance director Rob Wood.
Analysts at Peel Hunt forecast adjusted pre-tax profits of £114m and EPS of 5.4p for 2020, rising to £122m and 5.8p the following year.
| BREEDON GROUP (BREE) | ||||
| ORD PRICE: | 92.5p | MARKET VALUE: | £ 1.56bn | |
| TOUCH: | 92-93p | 12-MONTH HIGH: | 101p | LOW: 57p |
| DIVIDEND YIELD: | NIL | PE RATIO: | 20 | |
| NET ASSET VALUE: | 50p* | NET DEBT: | 35%** | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2015 | 319 | 31.0 | 2.30 | nil |
| 2016 | 455 | 47.0 | 2.90 | nil |
| 2017 | 652 | 71.2 | 3.98 | nil |
| 2018 | 863 | 79.9 | 4.01 | nil |
| 2019 | 930 | 94.6 | 4.64 | nil |
| % change | +8 | +18 | +16 | - |
| Ex-div: | na | |||
| Payment: | na | |||
| *Includes intangible assets of £464m, or 28p a share. **Includes lease liabilities of £48.5m. | ||||
