UK: Breedon Group's revenues up by 42.8% in 2016
Bredon Group Plc's revenues for 2016 grew by 42.8 per cent to GBP454.7m and underlying earnings before interest and tax (EBIT) increased by 57.8 per cent to GBP59.6m, including a five-month contribution from newly-acquired Hope Construction Materials (‘Hope’). This equates to an underlying EBIT margin of 13.1 per cent (2015:11.9 per cent), reflecting good progress towards our 2020 target of 15 per cent, the company said.
Profit before tax rose by 49.5 per cent to GBP46.8m. Underlying profit before tax rose by 57.4 per cent to GBP55.1m and underlying basic earnings per share increased by 30.2 per cent to GBP3.49. The group remained strongly cash-generative and, even after the increase in borrowings used to part-fund our acquisitions of Hope and Sherburn Minerals Group (‘Sherburn’).
By the end of 2016, several major projects were completed at the Hope cement works. In the second half of the year Breedon successfully installed new burners on both kilns, which increase the throughput of fuel, to maximise the efficiency of the manufacturing process. In addition, investment was made for the installation of new cyclones to speed up the rate at which raw material is fed through the preheater.
Boosting the sustainability of its process and extending the life of its shale quarry, Hope secured a contract with a major energy supplier for the supply of pulverised fly ash (pfa) as a complementary waste-derived raw material, enabling the company to use less shale and reduce SO2 emission. In the second half of 2016, Hope began preparations to receive increased volumes of pfa.
Breedon’s acquisition of Sherburn towards the end of 2016 not only expanded Breedon Northern’s geographical footprint in northeast England, with the addition of four quarries and five ready-mixed concrete plants but also gave the group its first two cementitous import terminals - at Blyth near Newcastle and Dundee in Scotland. These will be integrated into Hope Cement and will allow the company to import cement and ground granulated blast-furnace slag (GGBS). The addition of these depots enables Hope cement to provide national cement coverage for the first time.
Following completion of the purchase of Hope, Breedon acquired over 150 ready-mixed concrete plants, together with five quarries. Operational control of 25 of these plants and one quarry in the north of England was assumed by Breedon Northern from completion on 1 August 2016, with control of the remaining sites assumed by Breedon Southern.
All these operations performed in-line with expectations in the five months under Breedon’s ownership, a company statement said. Delivery of synergies from the acquisition was accelerated throughout the latter part of the year, as Breedon moved quickly to restructure its management teams, standardise its IT systems and started to identify the available commercial opportunities.
