Breedon Group (BREE) bought Hope Construction Materials in mid-2016, which helps to explain the sharp rise in half-year turnover and profits. The acquisition also gave Breedon four times as many ready-mixed concrete plants than before.
Even without this boost, trading conditions are looking more favourable as the government leans less towards austerity and more towards spending on infrastructure. The former Breedon Aggregates business continued to trade strongly in the six months to June, and at 15.8 per cent the underlying cash margin achieved the medium term target of 15 per cent three years ahead of schedule.
Overall margins were down from 14 per cent to 11 per cent after including the lower-margin Hope business, with some of the lower number reflecting the planned shutdown of both cement kilns for annual maintenance and upgrade. All Hope operations have been fully integrated ahead of schedule, which means that planned synergies of £10m should kick in next year.
As well as making acquisitions, Breedon also secured planning consent on two new quarries. One is situated just outside Glasgow, and the other will provide the only source of sand and gravel in County Durham.
Analysts at Numis are forecasting pre-tax profit for the year to December 2017 of £66.5m and EPS of 3.7p (from £55.1m and 3.4p in 2016).
| BREEDON GROUP (BREE) | ||||
| ORD PRICE: | 88p | MARKET VALUE: | £1.27bn | |
| TOUCH: | 87.5-88p | 12-MONTH HIGH: | 92p | LOW: 63p |
| DIVIDEND YIELD: | nil | PE RATIO: | 27 | |
| NET ASSET VALUE: | 34p* | NET DEBT: | 30.0% | |
| Half-year to | Turnover | Pre-tax | Earnings per | Dividend |
| 30 Jun | (£m) | profit (£m) | share (p) | per share (p) |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 163 | 20.9 | 1.43 | nil |
| 2017 | 326 | 31.2 | 1.77 | nil |
| % change | +100 | +50 | +24 | - |
| Ex-div: | - | |||
| Payment: | - | |||
| *Includes intangible assets of £195m, or 13p a share | ||||
