Breedon 1H17 results boosted by Hope contribution

Breedon Group plc, the UK’s largest independent construction materials group, announces its unaudited interim results for the six months ended 30 June 2017, reporting a strong profit improvement from former Breedon Aggregates business and robust contribution from former Hope Construction Materials.

The former Breedon Aggregates business posted a strong profit improvement, even after taking into account the shutdowns of both Hope kilns for planned annual maintenance and upgrade during the first half, which were completed on time and to budget, Breedon noted.

Group revenue for the half-year was GBP326.3m (2016: GBP163m) and underlying EBIT increased by 57 per cent to GBP35.8m (2016: GBP22.8m).

Aggregate volumes increased from 4.6Mt to 7.9Mt in the period under review versus a year earlier, while ready-mix concrete volumes were up from 0.5Mm³ to 1.7Mm³ and asphalt deliveries were stable at 0.9Mt.

Underlying EBIT margin was 11.0 per cent (30 June 2016: 14 per cent), reflecting, as anticipated, the lower margin delivered by the former Hope business and the phasing of Hope Cement’s shutdowns. The former Breedon Aggregates business however, delivered an underlying EBIT margin of 15.8 per cent, comfortably ahead of our medium-term target of 15 per cent by 2020.  "Whilst it will clearly be more challenging in the wake of the Hope acquisition, we continue to target a 15 per cent underlying EBIT margin for the Group by 2020," the company noted.

Breedon added that Hope Cement’s performance reflected two factors: the decision this year to carry out both annual maintenance and upgrade shutdowns at its cement plant in the first six months, which accordingly softened its first-half contribution and the integration of Sherburn’s cementitious import terminals.

In light of the fact that Breedons' cementitious activities have expanded and broadened with the acquisition of the Sherburn importation business, meaning they are no longer exclusively focussed on the Hope Cement Works, it has decided to bring the Division under the umbrella of the Group brand. Accordingly, from 1 August 2017 Hope Cement will be renamed Breedon Cement.

The integration of the former Hope operations is now complete, with all three divisions on a common IT platform. Breedon now expects to deliver the full GBP10bn of planned synergies in 2018.