Breedon on track to build on 2022 results
This week Breedon Group Plc announced its 2022 annual financial results and posted an impressive revenue increase of 11 per cent YoY. The British building materials company stated: "Our cement plants in GB and Ireland enjoyed their most successful year ever."
Breedon stresses that the outlook for the cement market remains positive, underpinned by large infrastructure projections in the UK. This is the despite cement volumes falling by nine per cent to 2.2Mt during 2022 from the elevated 2.4Mt levels of 2021. In fact, revenue from the cement division rose to GBP300.7m (US$388.4m EUR350.5m) for the period under review from GBP245.6m in 2021, a rise of 22 per cent.
"Despite the uncertain economic and geopolitical landscape, 2023 has begun positively and we are in a strong position," said Rob Wood, Breedon Group's CEO.
The company is implementing innovations in its customer relations with a dynamic and transparent pricing strategy and carbon surcharge mechanism which offers customers visibility of the carbon cost of the cement they purchase. Prices increased during the year in response to rising input costs.
Improved plant performance
Plant performance also rose with the company's Lansdown Cement Works in Kinnegad, West Meath, Ireland, increasing kiln reliability with its high use of alternative fuels. In 2021 the Hope Cement Works in Derbyshire, UK, achieved Plant Mastery status for delivering three consecutive years of kiln reliability in excess of 96 per cent. In 2022 kiln reliability rose marginally to 96.1 per cent, but both plants achieved a combined fossil fuel replacement rate nearing 50 per cent. The Hope Cement Works increased fossil fuel replacement by two per cent in 2022, while the Lansdown Cement Works increased its alternative fuel usage to 77 per cent from 75 per cent a year earlier.
Reducing clinker content of cement remains a primary goal for the company. CEM II now accounts for 50 per cent of Lansdown sales compared to 40 per cent in 2021. The Kinnegad plant has also been granted planning permission for a 17MW solar farm. Meanwhile, Hope Cement has applied to start an alternative raw materials project using First Graphene's PureGRAPH product to reduce CO2.
Construction outlook
Despite the positive outlook, Breedon is aware that the UK’s economic backdrop remains uncertain, particularly with regard to residential housebuilding. In June 2023 Tom Moore, economics director at S&P Global Market Intelligence, said data from May "highlighted a mixed picture across the UK construction sector, as solid growth rates in commercial and civil engineering activity contrasted sharply with a steeper downturn in housebuilding." The Construction Products Association expects UK infrastructure and industrial output will grow in 2023, underpinned by large ongoing projects.
Economists are largely in agreement that the construction sector continues to face challenges from high borrowing costs and rising living costs in the UK. However, Euroconstruct forecasts construction output in the Irish republic will grow 2.5 per cent in real terms, supported by the strong macroeconomic backdrop and structural need for housing and infrastructure investment.
