Construction materials supplier Breedon (BREE) swung to a pre-tax loss of £10.1m in the six months to 30 June, down from a £39.5m profit a year earlier. With the Covid-19 pandemic forcing the group to shutter the majority of its operations in late March, revenue plummeted by 81 per cent year-on-year in April, before rebounding to just a 1 per cent shortfall in June. Overall, sales across the first half dropped by 25 per cent to £335m.
Chief executive Pat Ward says the recovery “appears to be well underway”. Breedon returned to production in May and 90 per cent of its site were up and running at the end of June. The bounce back in sales has been led by the Republic of Ireland where demand is now almost back to pre-pandemic levels. A UK revival is progressing, albeit more slowly.
Net debt has ticked down by 13 per cent from the December year-end to £254m, equivalent to 1.9 times cash profits (Ebitda). Having secured a waiver for its June 2020 lending covenants, the group’s banks appear willing to extend the same courtesy for the December test date. It still has £219m undrawn from its borrowing facilities.
The group announced in January that it would be purchasing around 100 UK sites from Mexican cement giant Cemex (US:CX). But the £178m deal is currently under investigation by the Competition and Markets Authority (CMA). The CMA has until 26 August to decide whether to launch an in-depth ‘phase 2’ probe. In the meantime, Breedon expects to complete the transaction “imminently” and will hold the Cemex assets separately until the CMA reaches a conclusion.
