Polypipe (PLP) overcame several challenges in 2018 to push operating profits ahead by 5.3 per cent to £65.8m. The plastic pipes manufacturer broadened its market offering on the back of two significant acquisitions, although material substitution and legislative tailwinds will underpin sales over the long run.
Revenue from residential systems was boosted by a strong housebuilding sector. And while year-on-year growth in the first half was held back to 5.9 per cent because of the bad weather in February and March, this accelerated to 13.7 per cent in the second half, helped by a two-month contribution from recently acquired Manthorpe Building Products.
However, operating margins slipped from 19.8 per cent to 18.9 per cent, partly because of the relative growth of lower-margin new housebuilding volumes and operating inefficiencies. Investment in new production equipment, yard expansion and layout improvements are expected to improve operational performance.
On the commercial and infrastructure side, the second half of 2018 was boosted by new roads and smart motorway construction gathering momentum. So, for the year, revenue was down just 0.9 per cent on a like-for-like basis or just 0.2 per cent when including £1.3m generated from the acquisition of Permavoid in August.
Analysts at Numis are forecasting adjusted pre-tax profits of £75.2m and EPS of 30.7p this year, from £67.1m and 28.1p in 2018.
| POLYPIPE (PLP) | ||||
| ORD PRICE: | 390.6p | MARKET VALUE: | £780m | |
| TOUCH: | 389.6-390.6p | 12-MONTH HIGH: | 438p | LOW: 305p |
| DIVIDEND YIELD: | 3% | PE RATIO: | 16 | |
| NET ASSET VALUE: | 166p* | NET DEBT | 50% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2014 | 327 | 16.9 | 7.0 | 4.5 |
| 2015 | 353 | 41.5 | 17.1 | 7.8 |
| 2016 | 387 | 53.5 | 21.8 | 10.1 |
| 2017 | 412 | 55.6 | 22.7 | 11.1 |
| 2018 | 433 | 58.2 | 24.5 | 11.6 |
| % change | +5 | +5 | +8 | +5 |
| Ex-div: | 18 Apr | |||
| Payment: | 29 May | |||
| *Includes intangible assets of £402m, or 201p a share | ||||
