Profits up at Breedon despite Hope impacting on margins

breedon-logo_11The integration of Hope Construction Materials has resulted in Breedon Group doubling its revenues, leading to a 50% rise in half-year profits.

A trading update for the UK’s largest independent construction materials group revealed that income in the six months to the end of June jumped 100% to £326 million, up from £163m last year.

Profits came in at £31m, a 50% increase from nearly £21m for the same time in 2016.

The company highlighted strong profit improvement from the former Breedon Aggregates business and a “robust contribution” from former Hope Construction Materials which it purchased for £336m last year.

“Whilst it will clearly be more challenging in the wake of the Hope acquisition, we continue to target a 15% underlying EBIT margin for the group by 2020,” chairman Peter Tom said.

He added: “I am pleased to report that in the first half of 2017 the former Breedon Aggregates business posted a strong profit improvement and the former Hope Construction Materials business made a robust contribution, even after taking into account the shutdowns of both our cement kilns for planned annual maintenance and upgrade during the first half, which were completed on time and to budget.

“Although the outcome of the general election, coupled with the commencement of Brexit negotiations, have created some further uncertainty for the UK economy, the outlook for UK construction remains encouraging. It is reassuring that the government’s direction of travel appears to be moving away from continued austerity towards fiscal stimulus, which can only be helpful to our industry.

“We have consistently demonstrated our ability to generate value for our shareholders irrespective of economic conditions, through flexible and imaginative customer service, rigorous cost control, focused investment and a culture of continuous operational improvement. These disciplines, coupled with a strong balance sheet and healthy cashflow, put us in a strong position to take advantage of future growth opportunities, both organically and through further bolt-on acquisitions.

“More immediately, our performance in the first six months and our prospects for the second half give us confidence that we will meet 2017 market expectations.”

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