Breedon confident of delivering greater profits with further acquisitions

Breedon ready-mixed-concrete-truckBreedon Aggregates has said it is to consider further bolt-on acquisitions following a solid performance for the first half of 2016.

Announcing its unaudited interim results for the six months to 30 June 2016, the UK’s largest independent aggregates it intends to continue its strategy of “consolidating the UK building materials market” and that it is planning to complete its acquisition of Hope Construction Materials on August 1.

Sales for the firm, which said it remains confident of meeting 2016 market expectations, were much the same as last year, but profits are up and debt has been eliminated.

Breedon’s revenue for the six months to 30th June 2016 was up 2 per cent to £163.0m (2015: H1: £160.5m).

It sold 4.6 million tonnes of aggregates (2015: 4.5 million tonnes), 0.9 million tonnes of asphalt sold (2015: 0.9 million tonnes) and 0.5 million m3 of ready-mixed concrete (2015: 0.4 million m3).

Pre-tax profit for the period was up 19 per cent to £20.9m (2015 H1: £17.5m).

As of 30th June 2015, Breedon Aggregates had net debt of £58.3m. A year later it had net cash of £17.6m.

Executive chairman Peter Tom said: “We delivered an excellent operating performance in the first half, with both our businesses making strong contributions, improving revenues and EBIT margins.

“Whatever the prognosis for the UK economy, we remain confident that we can continue to generate value for our shareholders. We have some major contracts which will help to underpin our performance during a period of uncertainty, along with a strong balance sheet and a record of strong cash generation in challenging markets. We have also demonstrated our ability to deliver a strong performance through determined self-help and we will maintain this discipline irrespective of market conditions.

“The strategic rationale of the acquisition of Hope remains compelling and it will present new opportunities to deliver self-help improvements. It will also give us an even stronger platform for growth through a broader geographical footprint, increased scale, improved product mix, greater financial capacity and some highly talented people. We fully intend to use this strengthened platform to continue to pursue our strategy of consolidating the UK building materials market. Indeed, we believe that market uncertainty may create further opportunities for value-creating acquisitions and we are currently considering a number of potential bolt-ons.

“Against this background we remain confident of meeting 2016 market expectations.”

One the Hope deal is completed the enlarged group will comprise of three divisions:

  • Breedon Northern will combine Breedon’s Scottish operations with Hope’s aggregates and ready-mixed concrete operations in Scotland and the north of England;
  • Breedon Southern will combine Breedon’s operations in England and Wales with Hope’s remaining aggregates and ready-mixed concrete operations; and
  • Hope Cement will comprise all of Hope’s cementitious assets.

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